Paying a credit card early: What you need to know

There can be benefits to paying your credit card statement early. Examples? Avoiding late payments (and potential penalties) and improving your credit utilization, both of which can help you build credit.

In general, the sooner you pay off debt, the better it might be for you in the long run. But there’s more to understanding how early credit card payments could help you boost your credit scores.

What you’ll learn:

• Paying your credit card early means making one or more payments before the due date each month.

• You may be able to lower your credit utilization ratio by making an extra payment or paying before the statement closing date. 

• Because credit utilization is a credit-scoring factor, keeping it lower may help raise your credit scores over time.

• Paying your credit card bill on time and in full can help you avoid interest charges on purchases and late fees.

A credit card payment is considered on time if you make it by the due date. It’s early if you:

• Make your monthly payment after the card’s billing cycle ends but before the payment due date (this period is known as the grace period).

• Make a payment before your billing cycle ends.

To find when your billing cycle ends, contact the credit card company or review your credit card statement. The end of the billing cycle is also known as the statement closing date.

Everyone’s situation is different. But here are a few benefits to consider about making an early or extra credit card payment.

Making a payment—whether it’s before your billing cycle ends or not—could reduce the balance amount the card issuer reports to the credit bureaus. 

That means your credit utilization ratio could be lower, which is good for your credit scores. The Consumer Financial Protection Bureau (CFPB) recommends keeping your credit utilization below 30% of your available credit.

If you make one or more early payments before your billing cycle ends, you may be able to reduce your interest charges even if you don’t pay off your entire balance. That’s because you’ll be accruing interest on a smaller balance.

The CFPB recommends paying your credit card balance in full and on time every month. If you can’t pay off your statement, the agency still recommends paying as much as possible: “The higher the balance you carry from month to month, the more interest you pay.”

Making your minimum payment during the grace period means you won’t incur a late payment fee.

To help with this, you can schedule credit card payments in advance, set up automatic payments or set a reminder on your phone. Your credit card issuer may also offer mobile solutions to help you pay on time or even early.

Keep in mind that if you carry over a balance from the previous month, any payment you make before your statement’s due date is applied to that prior balance. This means that if you still owe on any previous charges, you’ll also need to make at least the minimum payment before the due date on your new bill.

There are many reasons to pay your credit card bill early if you can. But if you’re like many people, you probably have more bills than just a credit card every month. So it could be helpful to consider your broader finances. 

Paying your credit card bill early won’t hurt your credit scores. But it might reduce the amount of cash you have on hand for everyday purchases or emergencies.

If you’re using a credit card with a 0% promotional APR, keep in mind that you won’t be charged interest on your credit card balance until the promotional period ends. But it’s still important to make the minimum payment by the due date. You may not be charged interest, but late or missed payments can result in late fees and higher penalty interest rates. It could also have a negative impact on your credit scores.

If your credit card issuer charges interest when you carry a balance from month to month, costs can add up quickly. If you’re unable to pay your card in full like the CFPB recommends, making at least the minimum payment on time can help you avoid late fees and help keep your account in good standing.

It may help to consider what happens on your credit card issuer’s statement closing date, also known as the day the billing cycle ends. The statement closing date is generally around 21 days before your payment is due. On the day your billing cycle ends, your lender will:

• Calculate any interest charges for the month, along with your minimum payment amount.

• Create your monthly statement, post it to your online account and/or mail it to you.

• Record your outstanding balance and eventually report it to the credit bureaus.

Check out these answers to frequently asked questions about paying credit cards early.

There are potential benefits to paying your credit card bill early. Do your goals include working toward saving money, having more available credit and boosting your credit scores? If so, you could consider making early payments on your credit card.

If you’re new to credit or searching for your next credit card, Capital One can help. 

• See if you’re pre-approved for credit cards without harming your credit scores. 

• If you’re looking to build your credit with responsible use, explore cards for people with fair credit. 

• Earn unlimited 1.5% cash back on every purchase, every day, with a cash back rewards card. 

• Monitor your credit report and score with CreditWise from Capital One. It’s free for everyone, and using it won’t hurt your credit scores.