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News: Should You Pay Your Credit Card Bill Early? - Credit-Land.com

We all know that there can be consequences for you if you pay your credit card bill late. But what happens if you pay it early? The most obvious thing is you won't incur late fees and high interest charges. Plus, it may affect your credit rating and overall financial health.

To see whether it's good to pay your credit card bill early (or even twice a month), you should understand how it impacts your credit. First of all, when you pay your credit card early, you can lower your credit utilization rate, which is your debt-to-credit ratio. It is good for your credit to have your credit utilization below 30%, but when it's less than 10% it's much better. Credit utilization is used to determine your overall credit score, so when you keep it low, you contribute to improving your credit score.

Another good thing about paying your bill early is that you can avoid late payment fees. These fees can be as high as $41 for each missed payment nowadays. However, there are a few cards, such as the Apple Card, which have no late fees whatsoever, and some cards, like the Discover it® Cash Back, waive the first late fee.

You may also get rewarded for paying early. For example, the Citi Double Cash® Card will give you an additional 1% cash back for paying off your card balance.

One more good thing about paying your card bill early or twice a month is you can decrease expensive interest charges. Most issuers charge interest daily based on your annual percentage rate (APR), so the earlier you pay, the less interest you'll owe. It is possible to avoid interest charges all together if you pay off your card balance in full, though.

When you can't pay your credit card balances in full, paying your bill early will help you minimize interest payments and track your spending better.

tags : Credit Cards Money Management Build Credit

Disclaimer: This editorial content is not provided or commissioned by the banks or credit card issuer(s). Opinions expressed here are the author's alone, not those of the banks or credit card issuer(s), and have not been reviewed, approved or otherwise endorsed by the banks or credit card issuer(s). Reasonable efforts are made to present accurate info, however all info is presented without warranty. Consult with the issuing bank of the card or account for terms & conditions.
All rates and fees, and other terms and conditions of the products mentioned in this article/post are accurate as of the last update date but are subject to change. See the current products' Terms & Conditions on the issuing banks' websites.