How Often Should You Pay Off Your Credit Card?
How often should you pay off your credit card? Keep reading for insight into why paying off credit cards in full each month matters.
March 15, 2022
You know like clockwork it will arrive; every month you can count on your credit card statement greeting you.
While your credit card bill may come just once a month, there are some major benefits associated with making multiple payments throughout the month.
Making extra payments may sound tedious, but incorporating them into your financial routine can be worthwhile. Let’s look at how often you should pay off your credit card to get the most benefits from your payments.
When should you pay off your credit card?
Paying off credit cards in full each month is key to avoiding paying interest, racking up fees, accumulating debt and hurting your credit score. All of that is true. But it’s also true that you can get a bit more bang for your buck by increasing how often you pay off your credit card balance.
So, how often should you pay off your credit card? Ideally, multiple times a month. Take a look at these benefits to see how making more than one payment a month can be impactful.
Spreading out the impact of your payments
When you make smaller payments throughout the month, you spread out the impact of your payments on your checking account balance. This means that you can take smaller amounts of money out of your account throughout the month instead of one large lump sum at the end of the month when you might also have other big expenses due, like rent.
If you’ve ever drained your checking account paying a massive credit card bill before payday, you know just how stressful that can be. Take your stress down a notch by making smaller payments at different points throughout the month.
Making these smaller payments is also a great time to check in on your budget and where you stand on spending for the month. If you don’t want to face another big payment in a few weeks, you’ll know to cut back on spending.
Reducing your interest payments
If you have credit card debt, it can be very frustrating to make a monthly debt payment and feel like you’re not making much of a dent in your debt. Making credit card payments more often can help you get through that debt faster.
Reducing your credit card debt throughout the month can help you pay less in interest. If you’re in the process of paying off credit card debt, the less you pay in interest, the more money you’ll have to put toward the principal of the debt you owe. This can make it easier to pay off your credit card debt faster.
Helping you avoid late payments
You don’t have to wait for your monthly statement to arrive to make a payment on your credit card balance. If you want to, you can pay off your credit card account balance any time you make a purchase. That may be a bit extreme, but you get where we’re heading.
At any point throughout the month, you can fully pay off your credit card balance or just pay a portion of it. It’s easy to forget to make your credit card payment at the end of the month. By making credit card payoff a more regular part of your routine, it will be harder to let a payment slip through the cracks. And if you do forget to make that final payment at the end of the month, at least your credit card balance will be much smaller.
The last thing you want is to forget to make a credit card payment and be stuck paying interest and late fees.
You can also set up autopay to make sure you always pay your bill on time, but you will have to make sure you have enough money in your bank account to cover the payment when the time comes. Spreading out your payments throughout the month will make that automated payment smaller.
It’s important to note that credit card companies typically report your statement balance to the three credit bureaus, and if it’s always at zero, the bureaus could assume that you’re not using the credit card. For that reason, you may want to keep a small balance at the end of the billing cycle, but make sure to pay it off before the due date.
Improving your credit score
You can give your credit score a boost by lowering your credit utilization ratio whenever you make a credit card payment. Your credit utilization rate is the percentage of your total credit limit that you currently owe.
Ideally, you’ll want to keep your credit utilization ratio below 30%, but the lower you can get it, the more your credit score will benefit.
When you make extra payments before your statement closing date, the credit card issuer should report a lower balance to the three main credit reporting agencies — Experian, TransUnion and Equifax — which can help raise your credit score.
As an added bonus, you’ll be more likely to always make your payment on time if you pay your bill multiple times a month, which can also positively impact your credit score by strengthening your payment history.
Choose a payment schedule that works for you
It’s important to pay off your credit card balance in full and on time so you can avoid interest and fees, as well as a negatively impacted credit score. If you can afford to do so, making multiple payments throughout the month can be beneficial to you financially, as it can make your payments more manageable, help you pay down credit card debt faster and improve your credit score.
Even if you can’t make extra payments on a consistent basis, making an extra payment here and there can also be helpful.
All of that being said, what’s most important is making sure you find a payment schedule that works for you, your financial routine and your budget. For some, once a month does the trick, but for others paying their bill biweekly or every Sunday may be doable.
Whatever schedule you choose to adopt, consistency will help you get into a routine and avoid unnecessary mistakes like missed payments.
If you need help paying off credit card debt, check out the Tally† app. Tally has resources that can make paying off your credit card debt easier and potentially faster. Learn more about Tally here.
†To get the benefits of a Tally line of credit, you must qualify for and accept a Tally line of credit. Based on your credit history, the APR (which is the same as your interest rate) will be between 7.90% - 29.99% per year. The APR will vary with the market based on the Prime Rate. Annual fees range from $0 - $300.