Should I Pay My Credit Card Bill Early?

Benefits of Paying Your Credit Card Bill Early

Paying your credit card bill before its due date provides benefits to help your credit and your pocketbook.

Could Improve Your Credit

When you pay your credit card bill before your billing cycle ends, the balance amount your card issuer reports to the credit bureaus may be lower than if you paid after your statement closing date. This date is when your card issuer prepares your bill and typically reports your credit card information to the credit bureaus.

This matters because a lower balance reduces your credit utilization ratio, the percentage of available revolving credit you’re using. For example, if your credit card limits total $10,000 and your balance on those cards equals $4,000, your credit utilization ratio is 40%.

Experts, including the Consumer Financial Protection Bureau, commonly recommend keeping your credit utilization under 30%, but the lower the ratio, the better. High credit score achievers typically maintain a credit utilization ratio below 10%.

Save Money on Interest

Paying your credit card bill in full each month allows you to avoid interest charges altogether, with no remaining balance to carry over into the next month. If that’s not an option, it’s still wise to pay your bill as early as you can to limit interest charges, since credit card companies typically charge credit card interest daily based on your annual percentage rate (APR).

Example: If you carry a $1,000 balance and don’t pay it off, your average daily balance for a 30-day cycle is $1,000. But if you pay $500 on the 15th day of your billing cycle, your average daily balance drops to $750. By paying your credit card bill early, you’d enjoy a reduced average daily balance and pay interest on $750 instead of $1,000. That small savings can add up over time if you consistently pay early.

Also, bear in mind that interest charges offset the value of any credit card rewards you receive. By paying early each month—or even better, zeroing out your entire balance—you reduce or eliminate your interest charges and receive greater value on your rewards.

Learn more >> What Is a Grace Period?

Frees Up Available Credit

If your credit card is close to its limit, paying your bill early could free up credit you may need. For example, you may need the extra credit on your card to hold a hotel room reservation or cover an unexpected expense. Ideally, you have an emergency fund for such situations. But if not, and you suddenly need to replace a broken refrigerator, having available credit could prevent your card from being declined due to maxing out your credit limit.

Paying early can offer a safety net when you’re near your credit limit and interest charges could push you over the limit. If that happens, you may incur an over-the-limit fee from your credit card company. Some issuers may even lower your credit limit or suspend your account until your balance is paid down.

Learn more >> What Is Available Credit on a Credit Card?

Will Paying My Credit Card Bill Early Affect My Credit?

Paying your credit card bill early may impact your credit score by reducing your credit utilization—the amount of available revolving credit you’re using. This ratio represents the second most important factor, making up 30% of your credit score, so aim to keep your balances as low as possible.

By making a credit card payment before your statement closing date, you may reduce the total balance the card issuer reports to the credit bureaus. If you haven’t increased your balances on other credit cards, the lower balance should reduce your credit utilization ratio, which could positively impact your credit score when the credit bureau calculates it for that month.

Additionally, paying your credit card bill early helps to avoid late payments and build positive payment history. Your payment history is the top credit scoring factor, accounting for 35% of your FICO Score, the score used by 90% of top lenders.

What to Consider Before Paying Your Credit Card Bill Early

Paying your credit card bill early can be a smart strategy, but there are a few things to keep in mind:

• Could double-pay with autopay: If you have autopay set up, paying your bill too close to the scheduled autopay date could still result in an automatic withdrawal. To avoid paying your bill twice, you may need to pause your autopay settings when you want to pay your bill early.
• Consider multiple payments: Some card issuers allow you to make more than one payment per billing cycle. Making multiple payments could help you minimize interest charges while keeping your credit utilization lower throughout the month. For example, if you’re paid biweekly, you may find it easier to budget two half-payments each month rather than one full payment. Making multiple payments could also help you apply more money to your balance over time and wipe out your credit card debt sooner.
• Keep an eye on your bank account: Paying your credit card bill early could leave you with less available cash in your bank account for your other bills and expenses. Before you submit payment, review your budget first to make sure all your bases are covered.

When Is the Best Time to Pay My Credit Card Bill?

The best time to pay your credit card bill is before your due date to avoid late fees and negative entries on your credit reports. And if you can swing it, pay your entire balance before the due date to avoid interest charges altogether.

If you can’t pay in full, you can still benefit by paying your bill before the statement closing date. By doing so, your card issuer may report a lower account balance to the credit bureaus, which may improve your credit and reduce your interest charges on the remaining balance.

Learn more >> When Should I Pay My Credit Card Bill?

The Bottom Line

While paying your credit card bill early has its benefits, the most important habit is consistently paying your credit bill on time each month. Maintaining a strong payment history is crucial for building good credit, which could improve your approval odds for a mortgage, auto loan or other financial milestones.

To see how your credit card payment behaviors impact your credit—and how all your other habits are influencing your credit score—sign up for free credit monitoring from Experian. You’ll get alerts when something changes with your credit report and can even view items that may be impacting your score so you can take action to improve your credit.