When Should I Make Payments on My Credit Card?

If you’re like most of the U.S., you probably own a credit card. The Federal Reserve reports that more than 80% of people in the U.S. owned at least one credit card in 2020. To maintain a healthy credit score, you should pay at least the minimum amount owed on time each month. This will keep you in good standing and ensure you don’t default on any payments. Of course, if you can pay more—you should.

There’s no rule that says you have to wait until your payment is due to put money toward your balance. You can pay toward your balance before the deadline, and you can also pay toward your balance more than once. If you carry a credit card balance month over month, then paying multiple times throughout the month can be a financially sound move. 

Here are four reasons why paying your credit card bill over the course of the month can ultimately help with your credit debt:

1. Maintain your credit utilization

Your credit utilization is the amount of credit you have available, and it’s heavily weighted when it comes to your credit score—as much as 30%. It’s recommended that you don’t exceed 30% of your available credit, although 10% is better. Each month, your credit company reports to credit bureaus, and if you recently made a big purchase or are carrying a large balance, paying toward your card periodically throughout the month can help bring your credit utilization down before it gets reported to the credit bureau. Consider paying a chunk every time you get a paycheck. 

2. Lower the amount you’re paying in interest

One of the biggest pitfalls of using credit cards is the accruing interest rate. Over the life of a credit card, you could pay out thousands of dollars in interest. But when you pay larger amounts toward your balance or pay more frequently throughout the month, you can help cut down on the amount you pay over time. The lower your balance is day-to-day, the lower your interest rate.

3. Budget better

Whether you pay earlier or just the minimum each month, having a household budget is vital to helping you stay on track and pay all your bills on time. However, if you time your payments to when you get paid each month, you might find it easier to maintain your budget. The sooner you put the money toward your balance, the less time you have to spend it elsewhere. 

4. Motivate 

Seeing your balance go down can be a powerful motivator, and it can also provide a boost to your overall well-being. Working toward a positive goal can elevate your mood and help you stay on track. Plus, your bank account will thank you. 

When to seek credit counseling

If you’re struggling even make minimum payments, however, it might be time to seek out credit counseling. A credit counselor can help you craft a budget that works for your household, as well as provide options for repayment. They might even suggest you enroll in a debt management plan, where your counselor will work with your lenders to consolidate your loans into one affordable monthly payment and lower your interest rate, with the goal of paying off your debt in three to five years.