Making on-time payments is not only financially responsible, but it can help you with building and maintaining a high credit score. But what about paying your credit card early? Far from being bad, paying your credit card before the due date, or even making extra payments each month, might offer some benefits — including a positive impact on your credit score.
To decide if you should pay your credit card early, consider the benefits and weigh whether it’s financially worth it for you to pay your credit card bill before the statement closing date.
What It Means to Pay Your Credit Card Early
In a nutshell, paying your credit card early means you’re making your monthly payment before your due date. Or, it could mean putting extra payments toward your credit card before the billing cycle ends.
For instance, let’s say you check your credit card transactions online a few days before your billing cycle ends. You decide you want to pay about half of the balance right then, so you make a bank transfer through your online account, constituting an early credit card payment. Then, once you received your credit card bill after the grace period, you’d pay off the remaining balance.
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Understanding Your Credit Card Billing Cycle
Your credit card due date falls on the same date every month. Once you reach the end of your billing cycle, your credit card issuer will send you a statement letting you know the total amount that’s due, the minimum amount you’ll need to pay, and the credit card payment due date.
From the point your billing cycle ends up until your payment due date, you’re in what’s known as a grace period. During the grace period, you won’t be charged interest, assuming you’re paying off your balance in full by the due date of each billing cycle. This is a big perk, given how credit card debt is hard to pay off.
To determine the length of your credit card’s billing cycle, you can check your cardholder agreement or contact your issuer. You can also calculate the number of days between the start and end dates of the billing cycle — you should be able to find that on your credit card statement. In general, however, billing cycles last around 28 to 30 days.
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Potential Benefits of Paying Your Credit Card Early
If you’re wondering, ‘Is it bad to pay your credit card early?,’ there’s no need to worry.
In most cases, the decision to pay off your credit card bill early is beneficial to your credit.
Reduce Interest Charges
Credit card companies tend to charge their cardholders interest when they carry a balance from month to month. If you pay off your credit card early — especially if you pay off the balance in full before the end of the billing cycle — that means you could pay less in interest (or even no interest at all).
Every little bit can help, because the higher your credit card balance, the more interest you could end up paying. If you’re unsure of how much paying off your credit card early can help, consider using a credit card payoff calculator to help you determine your potential savings.
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Reduce Credit Utilization
Credit utilization is the percentage of your total available revolving credit you’re using. A lower credit utilization means that you’re not using as much credit, which could signal to creditors that you’re financially stable enough that you don’t need to rely on credit. In other words, your credit score could go up when your credit utilization is low, and the opposite could happen when it’s high — it’s generally recommended to keep it below 30%.
By making an extra credit card payment earlier than when your current billing cycle ends, you may be able to lower your credit utilization ratio. Even if you’re making a payment before the due date, you could still lower your credit utilization which can positively impact your credit scores.
To calculate your current credit utilization, add up all of your current credit card balances and divide that amount by your total credit limit. For example, if you have three credit cards each with a limit of $5,000 — $15,000 in total — and respective balances of $1,500, $800, and $2,000 from using your credit cards. In this example, your credit utilization would be around 28%.
Avoid Late Fees
Paying your credit card early — even if you’re not paying off your balance in full — means you’ll reduce your chances of getting charged a late payment fee. However, if you have a balance remaining from the previous billing cycle, note that early payments could go toward those previous charges first.
To be clear, you need to pay at least the credit card minimum payment stated on your credit card balance to avoid late fees. For instance, if you make extra payments but still have a balance leftover by the end of the billing cycle, your credit card could mail a credit card statement with the remaining balance due, plus a minimum amount you’re required to pay. In this case, you’d need to pay that amount before the due date to avoid paying late fees.
To make sure you’re still making on-time payments, consider scheduling payments, setting up autopay, or putting reminders on your calendar to help yourself remember to pay your credit card bill.
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When Is the Best Time to Pay a Credit Card Bill?
There isn’t a best time to pay a credit card bill, but it’s not a good idea to pay your credit card bill late — meaning after your due date has already come and gone.
There are a number of consequences of credit card late payment. Paying late means that you’ll get hit with late charges, and it could have a negative impact on your credit score. Depending on how late you are with paying your bill, your credit card issuer could also enact a penalty APR, which is higher than your regular one.
Paying your credit card early can offer plenty of benefits. This includes potentially lowering your credit utilization, avoiding late charges, and reducing your interest charges.
To help you save more money when using your credit card, consider using a credit card that offers a competitive interest rate and allows you to earn rewards. With SoFi’s credit card, for instance, you can earn cash-back rewards on qualifying purchases.1 Plus, you may be able to lower your APR by 1% when you make at least 12 on-time payments.
Will paying my credit card bill early affect my credit?
Paying your credit card bill early can help to boost your credit score because on-time payments are one of the major factors that affect your FICO score. Plus, it could lower your credit utilization ratio, another major factor that goes into calculating credit scores.
Is it ever bad to pay my credit card early?
It’s not bad to pay your credit card early since it shows that you’re a responsible cardholder. As long as you make at least the minimum payment, you won’t get hit with late fees or other types of consequences, such as a negative mark on your credit report.
What happens if I pay the credit card bill before it is billed?
If you pay your credit card bill before the end of your billing cycle, the payment will either go toward the previous month’s statement — if you carry a balance — or toward the current balance. In any case, paying a credit card early will lower your statement total and could boost your credit by lowering your credit utilization ratio.
Can I pay my credit card the same day I use it?
Yes, you can. However, you may want to wait until the payment has been posted to make sure the amount you’re putting toward your bill is correct.
Photo credit: iStock/andresr
SoFi cardholders earn 2% unlimited cash back rewards when redeemed to save, invest, or pay down eligible SoFi debt. Cardholders earn 1% cash back rewards when redeemed for a statement credit.1
1See Rewards Details at SoFi.com/card/rewards.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s
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