What Is the Best Time to Pay Your Credit Card Bill?

The law of gravity dictates that what goes up must come down, and the rules of credit cards say that whatever account balance you rack up, you have to pay back.

Most people leave their payment to the due date, but you can also choose to pay it sooner. If you’re keen to avoid interest charges and other potential negative consequences, you might be wondering what the best time to pay your credit bill is. 

Paying at different times can result in different outcomes. To understand why, we’ll run through how the credit card billing cycle works, how it impacts when you should pay your bill and a few candidates for the best payment date.

How the billing cycle works

Before you can know the best time to pay your bill, you need a solid understanding of how a credit card billing cycle works. Even if you think you know already, chances are that you’ve missed some of the finer details.

Your credit card issuer will usually list the billing cycle’s open and close dates on your statement. For example, your open date could be March 1, and your close date could be March 30 (although any dates are possible, and your statement might open in one month and close in another). Every purchase made between those dates will show up on your credit card statement. If you’re charged late fees for missing your minimum payment or due date, they’ll show up in the next month’s billing cycle.

A billing cycle usually lasts between 28 and 31 days, but the total length can vary by up to four days between months (to account for different months having different numbers of days). The only way to be sure of yours is to check your statement or cardholder agreement. 

Payment date vs. closing date 

The date most people are familiar with is the payment due date, which is the final day you have to pay your bill if you want to avoid late fees or interest charges from your lender. The due date comes at least 21 days after the billing cycle’s closing date. The time between the closing date and the due date is known as the grace period. 

The information your credit card issuer will report to the credit bureaus is based on what’s current as of your billing cycle closing date. Based on our above example, if your credit card balance is $500 on March 30, that’s the amount that will be factored into your credit report.

Why the date you pay your bill matters

Now that you know how the billing cycle works, we can explain why altering your payment date can make a difference in your personal finances.

Credit score

We mentioned that credit card companies send your statement balance to credit bureaus at the end of the billing period, but now it’s time to outline why this is so important. 

One of the factors that determines your credit scores is your credit utilization ratio: the percentage of your total available credit that you use each month. Most experts recommend keeping this below 30%.

For leading credit scoring agency FICO, amounts owed (which includes credit utilization) makes up 35% of your FICO credit score — so it’s important to pay it some attention.

Because credit bureaus only find out your account balance on the last day of your statement, you can ensure your credit utilization ratio ends up being below 30% by paying some of your balance before your billing cycle ends.

In turn, having a good credit score yields all kinds of benefits, such as lower interest rates in the future and a better chance of getting a mortgage.

Credit card interest

As long as you make your credit card payment in full before the due date each month, you’ll avoid credit card interest. However, even if you can’t afford to foot the entire bill, you can minimize your interest by paying whatever you can as soon as you can.

Credit card companies calculate interest based on your average daily balance over the billing cycle. So paying off smaller portions of your balance as soon as you’re able can help to lower your average daily balance and, in turn, your interest charges.

But the interest-related benefits don’t end there. As we’ve seen already, a better credit score means access to the best credit cards and deals, including lower interest rates. So, when you pay your balance at the optimum time, you take a step toward achieving this — especially if you pay off your entire balance.

What is the best time to pay your credit card bill?

Now we finally come to the core question of the article. When should you pay your credit card bill?

To find an answer, we’ll evaluate paying on or before your due date versus paying before your statement closing date.

Paying on or before the due date 

If your main priority is ensuring you avoid interest, paying your full bill by the due date is all you need to do. This will also help you build up a strong payment history, which is another factor that credit scoring agencies consider. (It makes up 30% of your FICO Score.)

If you are paying your bill in full, it won’t make a difference if you pay on or before the due date. However, waiting until the due date will leave you no wiggle room if something goes wrong or you forget. So, you may want to play it safe and pay your bill before the due date. You also might consider setting up autopay so that your payment is taken from your bank account automatically each month.

But what if you’re unable to pay your balance in full? In this case, try to pay your bill before the due date, as early as possible for your financial situation. You might even consider making multiple smaller payments before the due date. As we mentioned above, anytime you can reduce your average daily balance, you’ll accrue lower interest charges.

If you’re happy with your credit utilization rate or feel confident sticking below the 30% rate each month, you might not find it necessary to pay earlier than your due date.

Plus, there’s no need to keep track of your billing cycle if you know you’ll pay on your due date each month. You can just set up autopay so the money goes out of your bank account automatically. However, waiting until the due date will leave you no wiggle room in case something goes wrong (such as a technical error). You may want to play it safe and plan to pay a day or two before.

Before the statement closing date

If you’re trying to improve your credit score and want to stay below the recommended 30% credit utilization ratio each month, you may be better off aiming to pay some of your balance before the statement closing date.

But bear in mind, if you choose to pay down your balance before the closing date, leave a portion of it unpaid. If your balance is $0 on your closing date, the credit bureaus may think it’s an unused account, and you won’t gain the benefits of good card management and on-time payments on your credit report.

So, if you choose to make a payment before your closing date, plan to make two payments — a partial payment before the closing date and the remaining balance before the due date. Also, if you make a payment before the closing date and there’s a remaining balance on your account, you’ll still have to make a minimum payment when you receive your credit card statement.

How about paying your bill twice a month?

There’s no rule saying that you can only pay your credit card once a month, and we’ve already mentioned that in some cases, cardholders might want to make payments twice a month (or more).

This strategy can also be useful if you’re struggling to budget for your credit payments. For instance, you could make a payment after you receive your paycheck each week. This can be easier to handle than making one large lump-sum payment at once.

Set yourself up for success

Ultimately, paying your bill on time is the primary goal. But if you can figure out how to tailor your payments, you may be able to boost your credit score or lower your interest charges.

If you’re currently struggling with credit card debt and want your credit cards to be automatically paid on time, consider Tally’s† credit card repayment app. By connecting all your credit cards, it manages your payments on your behalf and even offers a lower-interest line of credit. 

†To get the benefits of a Tally line of credit, you must qualify for and accept a Tally line of credit. The APR (which is the same as your interest rate) will be between 7.90% and 29.99% per year and will be based on your credit history. The APR will vary with the market based on the Prime Rate. Annual fees range from $0 - $300.