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6 reasons to pay your credit card bill early

You know the warnings and concerns about paying your credit card bill late. But what’s the benefit to paying off your credit card bill early? The more you understand how credit cards and your credit score work, you might be finding some ways you can send in that payment a little earlier.

Here are six reasons why making your credit payment early is a good idea:

1. Paying your credit card early frees up your line of credit

Try to keep the total of all your card balances at 50 percent or less of your total limits. This helps increase what is known as your capacity and reflects positively on your credit score. The ideal point for card balances is about 30 percent of the spending limit, but that is a long-term goal and it may take some time to get there.

If you make a big purchase, don’t wait until it shows up on your bill. You can start paying down that spending right away, freeing up your line of credit on your card.

2. Paying your credit card early can improve your credit score

A house. A car. Even a job. The fact is, your credit score is used is for many parts of your daily life. Paying bills on time is 35 percent of your credit score. Why put that at risk by waiting until the due date to make the payment?

3. Paying your credit card early will help you track spending

Credit cards can offer some great benefits. But when you start to carry large balances, you can get in trouble. If you get paid every two weeks, or if you have a spouse with an alternating pay day, you can coordinate credit card payments to match.

By paying off credit card charges when they come in, you are more aware of how much you are spending and finding a balanced budget. (You have worked on that budget, right? If not, create a budget.)

4. Paying your credit card early reduces the interest you are charged

If you don’t pay a credit card in full, the next month you are charged interest each day, based on your daily balance. That means if you pay part (or all) of your bill early, you will have a smaller average daily balance and lower interest payments.

This goes without saying, but check your credit card rates. Credit unions are known for their excellent rates, meaning that you have more of your money stay in your pocket. Make sure you compare your current credit card to Numerica Credit Union’s credit cards. You could be saving a bundle by staying at a local credit union.

5. Paying your credit card early means paying off your debt faster

This is helpful in a couple of ways. First, if you are paying down your balance sooner, it reduces the amount of interest you will be charged, bringing your total expense down. Secondly, your cash is going to pay off your bills rather than add to them.

6. Paying your credit card early means you are less likely to forget about it

Unless you pay for a bill immediately when you get it, you are tempting the fates. Why take the chance it will get lost in the shuffle or be late by waiting until the last minute?

Consider enrolling in Online Bill Pay. That is a great solution to make sure your minimum balance is paid on time. You can always make additional payments throughout the month. Numerica’s online payments let you set reoccurring payments, choose the date to pay, and you can pay the minimum balance or more.

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November 29, 2022