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Paying your credit card bill on time every month is one of the simplest things you can do to build your credit. When you open a credit card, its issuer may offer you several options to pay your bill, including automatic deposits from a bank account.
No matter the method you choose to pay, it's important to understand your bill and how to pay it before it comes due so you don't risk missing a payment and hurting your credit.
How to Make Your Credit Card Payment
Before making a payment, you'll need to review your credit card bill to understand how much you owe. Your bill will show your new balance, minimum payment due and payment due date.
- The due date: The date by which the issuer has to receive payment
- The new balance (or statement balance): How much you need to pay if you want to avoid paying interest on future purchases
- The minimum payment: How much you need to pay to keep your account in good standing
Your credit card's online account or app may also show your current balance. The current balance may be higher than your statement balance, as it will include transactions (such as purchases or fees) that have occurred since the statement was created. Paying your current balance isn't necessary, but it could lower your next statement's balance.
If you don't make at least the minimum payment within 30 days of your due date, the credit card issuer may report the late payment to the credit bureaus. But that's not an excuse to delay payment until the last second: You may be charged a late payment fee and face other consequences for being just one day late on a credit card payment.
Credit Card Payment Methods
Credit card issuers may offer you different options for making your bill payments:
- Autopay: Request automatic payments from a linked account each month. You can generally choose the amount, or opt for the statement balance or minimum payment, and choose your payment date.
- Online payments: You can log in to your online account or app and manually request a payment from a linked account. Online payments make it easy to request a payment at any time, and you can choose the amount to pay.
- In-person payments: You may be able to make a payment at a bank branch or ATM, which can be a fast and secure way to make your payments.
- By phone: Call the bank to make your payment after confirming your credit card account and payment method. The number may direct you to an automated service line.
- Mail or wire a payment: You may be able to mail a personal check, cashier's check or money order, or send a wire for your payment. Other options may be better as your payment could get lost or arrive after your due date. If you decide to mail a payment, don't mail cash.
You'll also want to review your credit card statement or the card issuer's website for processing times and deadlines. For example, some credit card companies might consider your payment late if they don't receive it by a certain time on the due date. Others may process the payment that day, or process it the next day but not consider you late.
Setting up autopay for at least the minimum payment can be a good way to avoid missing the cutoff point. If you monitor your balance and bank account, or maintain a large enough bank account balance, using autopay for the full statement amount can make managing your credit card easier. However, be careful, as autopay can also lead to overdrafting your account.
When Should You Pay Off Your Credit Card Balance?
But if you can't pay your statement balance in full, don't worry—just try to make the minimum payment by the due date. Any balance remaining on your credit card will carry over, or "revolve," to the next month's balance and be susceptible to interest.
Once you've revolved a balance, paying it off before your payment due date can help you save money as credit card issuers generally charge interest daily. In some cases, paying early can also help your credit scores.
Will Carrying a Balance Affect My Credit Score?
While a late payment won't hurt your credit scores unless you're 30 or more days late, carrying a balance may have a more immediate impact. Whether it hurts your scores can depend on the balance amount relative to your available credit.
The important factor here is your credit utilization ratio, which measures the amount of available credit you're using. It's usually shown as a percentage that compares a card's balance against its credit limit. For example, if your credit card's limit is $200 and your balance is $100, your credit utilization ratio is 50%.
Your utilization is an important credit scoring factor, and a lower utilization rate is best for your scores. A high utilization rate (above 30%) can start to do harm to your scores.
One potentially confusing point is that the important numbers here are the card's balance and credit limit as they appear on your credit report. These numbers come from when the credit card company sends an update to the credit bureaus, which will often happen around the end of your statement period.
As a result, the balance may be closer to your statement balance than your current balance if you check your account online. The arrangement means you can also have a high utilization rate even if you pay your bill in full each month. If you want to avoid this, you could pay down your balance throughout the month.
Tips for Keeping Up With Credit Card Payments.
You can stay on top of your credit card payments by monitoring your spending, credit card account and payment method. Here are a few tips:
- Set up autopay. Using autopay for at least the minimum monthly payment can help you avoid late payment fees.
- Choose your payment dates. Many card issuers let you choose your bill's due date. Choose a date that's easy to remember and aligns with your finances (the day after you're paid, for instance).
- Sign up for notifications. If your card issuer offers it, you may be able to sign up for email, text and app notifications. You can set up alerts for when your balance goes above a certain point or to let you know your bill is soon due.
- Monitor your spending. It's easier to pay off your bill in full if you limit your spending to purchases you can afford. The advice to treat your credit card like a debit card, spending only what you have, can come in handy here.
- Make payments throughout the month. Making early payments can lead to lower utilization rates and help you avoid surprisingly large bills. If you get paid weekly or bi-weekly, you could choose those times to pay down your credit card bill as well.
Monitor Your Credit Card Accounts
Keeping track of your credit card accounts and bills can become more complicated if you have several cards. Creating a budget and using budget software that lets you link and sync multiple accounts can help you stay on top of your spending and balances. You can also sign up for Experian's free credit monitoring service to review the balances on your credit report and get automatic notifications if there are any suspicious changes.