The best time to pay a credit card bill is a few days before the due date, which is listed on the monthly statement. Paying at least the minimum amount required by the due date keeps the account in good standing and is the key to building a good or excellent credit score. That’s true for everyone, but some people might want to take things a step further, particularly cardholders carrying balances from month to month and people with high credit utilization.… read full answer
If you have a credit card balance that you carry from month to month, it’s best to pay that credit card’s bill as soon as the monthly account statement becomes available. This will save you money on interest. Paying the card’s monthly bill in full for two consecutive months will also reduce your interest charges by reinstituting your account’s grace period. Instead of purchases beginning to accrue daily interest charges right after you make them, you will have a window between when your monthly statement becomes available and when your bill is due to pay with no interest.
If the balance listed on your monthly credit card statements consistently equals more than 30% of the card’s credit limit, consider paying your bill multiple times per month. Paying once in the middle of the month and again before the due date will reduce the balance listed on your statement. That, in turn, will lower your credit utilization, which should help your credit score.
Here’s a quick example: You have a credit card with a limit of $1,000. You charge $500 to it, using up 50% of your credit. Then, you make a payment of $300 before the billing period closes and your statement is generated. That brings your statement balance to $200 and your utilization to 20%. Paying off the final $200 before the due date then keeps your account in good standing.
Here’s when to pay a credit card:
If your credit utilization is 30% or less and you pay in full every month, pay your credit card bill by the due date listed on your monthly account statement.
If your balance is more than 30% of your credit limit, pay your credit card bill before the billing period closes to reduce your credit utilization, then pay the remaining balance by the due date.
If you’re carrying a balance from month to month, pay off your full credit card balance as soon as possible to save on interest.
It’s a good idea to set up automatic payments with your credit card issuer so you don’t have to worry about when to pay your credit card bill. Doing so will automatically make a payment from a linked bank account every month on the due date, or a day of your choice before that. You can’t be marked late unless your account has insufficient funds. And even with automatic payments set up, you can still make additional payments any time you want.
If you don’t pay your credit card bill at all, you will likely get charged a late fee, lose your grace period, and have to pay interest at a penalty rate. Your credit score will also go down if you fall at least 30 days behind on a credit card bill payment. If you continue to not pay, your issuer may close your account, though you’ll still be responsible for the bill.… read full answer
If you don’t pay your credit card bill for a long enough time, your issuer could eventually sue you for repayment or sell your debt to a collections agency (which could then sue you). But it’s not all or nothing with credit card payments. It’s an entirely different story if you simply pay the minimum amount required.
If you always pay at least the minimum required by your due date, your account will remain in good standing and you won’t have to face late fees, penalty rates or credit score damage. You’ll just have to pay interest on the remaining balance at your card’s regular rate.
Here’s what happens if you don’t pay your credit card:
If you pay the minimum required but not the full balance due: Your total unpaid balance will accrue interest at your card’s normal APR. You’ll also lose your grace period, so new purchases will accrue interest right away, too.
If you don’t pay at all: Your account will be reported as past-due to the credit bureaus after two missed due dates. That will hurt your credit score. In addition, a late fee of up to $40 may be tacked onto your balance (but it can’t exceed your minimum payment). Your issuer may also apply a penalty APR to new purchases, though they must inform you 45 days in advance.
If you get 60 days behind on minimum payments: The issuer can apply a penalty APR to your entire existing balance.
If you get 180 days behind on minimum payments: The credit card company will have to charge off your debt (consider it a loss for taxes). But that doesn’t mean they’ll stop trying to get you to pay. They may sell your debt to a collections agency, or they may choose to sue you.
If you don’t pay for 3-15 years: You are vulnerable to a lawsuit, depending on which state you live in. Time-barred debt is not a valid defense until your state’s statute of limitations runs out. If you lose a lawsuit and are ordered to pay, you might have your wages or bank account garnished.
So the bottom line is that you should always try to make at least the minimum payment on your credit card. Sure, you’ll still owe interest, but you won’t have to deal with the other negative consequences of not paying your credit card at all.
If you’ve fallen behind, the most important thing to do is catch up on your missed minimum payments and bring your account back to current status. After that, your goal should be to pay your full balance due for two months straight. Though that’s easier said than done, doing so will restore your grace period and stop the buildup of new interest.
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