When Is The Best Time To Pay My Credit Card Bill?

The best time to pay your credit card bill: Via @ForbesAdvisor

8/1/2021 5:00:00 AM

The best time to pay your credit card bill: Via ForbesAdvisor

When a credit card company sends a bill, the cardholder usually has little less than a month to pay back what’s owed before incurring any interest. Paying a bill right away (or at least as soon as possible) might seem like the most responsible thing to do, but this doesn’t always hold true, and choo

Which strategy is right for you?Rule #1: Pay in Full, On TimeBefore proceeding any further, there is actually one simple answer that’s true for all credit card users, no matter the circumstance: Pay in full, on time. Contrary to an enduring myth, carrying credit card debt past the end of the billing period is not good for credit scores—it’s usually the opposite. Paying what’s owed and being consistent about it are two of the most important factors on a favorable credit report.

Pfizer says COVID-19 vaccine works in kids ages 5 to 11 Pfizer says COVID-19 vaccine safe, effective for kids ages 5 to 11 Why storm chasing is 'akin to an addiction'

Carrying a balance from month to month is often costly. The only real benefit is the capital that’s been temporarily extended to the cardholder. With interest rates commonly exceeding 15%, credit cards are an inefficient way to borrow money for longer than a month or two. As such, the first step in timing payments should be simply ensuring that bills stay small enough to be paid reliably.

Ensuring bills remain reasonable is easier said than done and the numbers prove it— the average U.S. adult with a credit card carries anongoing balance of over $5,300. Even for responsible people, “Rule #1” can devolve into simply meeting a mandatory minimum to avoid penalty fees. Luckily, any credit card user, no matter their credit score or level of debt, can still adjust the timing of payments to help a financial situation. headtopics.com

To Maximize Financial Return, Pay LaterMany Americans do pay off bills in full and many keep monthly spending well below the recommendedcredit utilizationthreshold of 30%. People who do these two things reliably are more likely to have a favorable credit score. These routinely-responsible cardholders don’t benefit much from rushing to pay off monthly bills.

Instead, late-cycle-payers can likely afford to take full advantage of the credit extended to them each month. Of course, the bill total will stay the same throughout a billing period, but cardholders can benefit from the “time value of money” extended to the amount owed. This value comes from the concept that there is value in simply holding a sum of money over time, based on its potential to earn.

Up until the time cardholders actually pay the bill, credit card users can still earn interest on the money owed. Whether that money would otherwise be invested somewhere or held in a checking account, the additional interest this would garner can add up to a significant sum over months and years. So, for cardholders unburdened by debt or a waning credit score, waiting to pay until close to the end of a billing cycle will almost certainly increase overall wealth, if just by a little at a time.

To Improve Credit Score, Pay SoonerCredit card users may have noticed already that exceeding 30% of a monthly credit limit can hurt a credit score. Less well-known, however, is another way to influence that percentage, known as “credit utilization.” This adds a different type of value—one that goes beyond money spent or saved. headtopics.com

8 people killed in shooting at Russian university Afghanistan's women judges are in hiding, fearing reprisal attacks from men they jailed Analysis: Vaccine gap stokes super spreader fears ahead of UN's first post-Covid meeting

Credit card companies report a cardholder’s balance to credit bureaus every month, but this doesn’t necessarily coincide with the end of a billing period. Keep in mind that every time a cardholder pays off a balance in full, the credit utilization ratio temporarily drops to zero percent. So no matter how much they spend in a month, if a cardholder happens to pay a bill just before a balance is reported, the credit utilization on the account looks very low. In that case, the part of their credit score that’s determined by “amounts owed”—an important category to the report—will be calculated favorably. This has the potential to significantly improve a credit score.

But without knowing exactly when your balance is reported to credit bureaus, what’s there to do? A common strategy for those focused on improving their credit score is to simply pay off the credit card bill quickly with the expectation that doing so is more likely to precede reporting than if the payment was stalled.

It’s also possible to pay off the balance anytime credit utilization nears 30%, even if that means paying several times within a billing period. Along with close monitoring of one’s credit utilization, this might require some financial stability and might be impossible for people who find themselves waiting on the next paycheck in order to afford paying down a credit card bill.

Paying at the last moment, of course, offers cardholders the highest degree of flexibility with their money and may still be the only practical option if cash is tight. Most credit card companies allow cardholders to adjust the dates of their billing period so the due date for bills could be made to fall immediately after a recurring payday. For some, this increases flexibility and helps maintain low credit utilization at the same time, even when living paycheck to paycheck. Depending on which bank or institution issues the card, adjusting billing period dates can be as simple as logging into an online account or calling customer service. headtopics.com

To Pay Less Interest on Debt, Pay ASAPCredit card users who always follow Rule #1 need never worry about paying interest. But for those carrying a balance, it’s important to knowhow the amount of interest owed is determined. Each month, credit card companies take an average of the balance owed by a cardholder on each day of the billing period. This is known as an “average daily balance.” This number is applied to the cardholder’s specific interest rate.

Out of convenience, cardholders in debt sometimes wait until the due date of their next bill to finish paying off the previous month’s balance. This means that for every day the payee might have had the money to pay even part of that bill off they were still on record as owing the full value of their balance. If instead they paid off their balance halfway through the billing period, their average daily balance for that period would drop by half. If halfway through the period they were able to pay off, say, only a quarter of their debt, they could still reduce their average daily balance by over 12%. Any amount paid down at any time during the period can reduce the daily average balance.

Covid-19 vaccine for 5- to 11-year-olds is safe and shows 'robust' antibody response, Pfizer says Russia's ruling party poised to retain majority amid allegations of voter fraud Miley Cyrus Addresses Panic Attack During Summerfest Performance

For example, for a cardholder who has a $1,000 balance, let’s assume that they paid off $500 of their balance at the end of the billing cycle. This cardholder’s average daily balance would be over $1,000 ($1,000 plus interest charges) for each day of the billing cycle. Compare this to a cardholder who pays off $500 in the middle of the billing cycle—who’s average daily balance will be over $1,000 only for half of the billing cycle, and then around $500 thereafter. The second cardholder would pay less in interest over the course of a month.

Depending on the balance and the interest rate, the savings could be significant.Rather than deciding to pay at the beginning or the end of their billing period, cardholders in debt should simply keep working away at what they owe as they can, knowing that it’s not just the total paid off at the end of the month that matters, but the timing, too.

Bottom LinePay credit card bills in full, on time every time. When payments are made within the billing cycle can be optimized to maximize return on the credit or to help improve a credit score. To make the most of the money borrowed, leave the money in an interest-earning bank account longer and pay bills just before interest would begin to accrue. To keep credit utilization rates low and bump a credit score up, pay as early as possible. But, never forget: never carry a balance if it can be avoided.

Read more: Forbes »

Jingle, Pluck, and Hum: Sounds from Space

A “sonification” project led by NASA’s Chandra X-ray Observatory and NASA’s Universe of Learning program transforms otherwise inaudible data from some of the world’s most powerful telescopes into sound.

Advisor When it’s due. I should charge for this kind of advice. Advisor wow

The 100 Greatest Music VideosIn honor of MTV’s 40th anniversary, we’ve decided to rank the top 100 music videos of all time. Well gimme all your loving by zz top Worst, most ridiculous list ever. Who came up with this top 10? Thriller isn't even in the top 40? Are you even aware of what music videos are?

Fans Wonder How Olympic 100 Meters Would Have Gone With Sha'Carri RichardsonJamaica's Elaine Thompson-Herah won in record time, but would the U.S. trials champ have been faster? Sha'carri only runs fast in the 🇺🇸. Her best time outside of the 🇺🇸 is 11.44. 7th place hurts huh? Please delete this delusion. Elaine would've smoked her.

Fans Wonder How Olympic 100 Meters Would Have Gone With Sha'Carri RichardsonJamaica's Elaine Thompson-Herah won in record time, but would the best American have been faster? Why not just celebrate her achievement and let it go at that? C'mon people. Let's not spoil Elaine's gold moment please. wow

Why Democratic spending bills don't include abortion restrictions.MaddowBlog: It's striking to see - for the first time in decades - a White House budget and House-passed spending bills without restrictions on abortion funds. MaddowBlog It’s sad and pathetic spokanetom MaddowBlog They hope the SCOTUS will over turn the abortion. MaddowBlog IF REPUBS ARE IN THEIR 'HIPPY' STAGE, MABE THEY'L LEARN TO KEEP THEIR NOSES OUT OF WOMEN'S VJJ'S, TRY MINDING THEIR OWN BUSINESS WHEN IT COMES TO WOMEN'S RIGHTS. THEY OUGHT TO HAVE A MUCH BIGGER PROBLEM COVERING THEIR ASSES WHILE KISSING TRUMP'S.

Bill Maher Says Tokyo Olympics Are Out-“Woke”-Ing The Oscars, Proving Cancel Culture Is “An Insanity That Is Swallowing Up The World”“Please don’t make the Olympics into the Oscars,” Bill Maher pleaded in his show-ending New Rules monologue in tonight’s return of Real Time to HBO after a month’s bre… ...what? Why do you feel so compelled to report on his show?

The looming $21.3 billion in debt that could cost Americans their homesThis week in Extra Credit, we talk rent debt, student-loan cancellation and the debt ceiling Michael Burry Warns Retail Traders About the 'Mother of All Crashes' GoldmanSachs is getting ready for StockMarket crash by dumping their stocks to retail bagholders - horrible