What to know about paying a credit card early

You might say the earlier you’re able to pay something off, the better it will be for you in the long run. But does this hold true for credit cards?

The short answer is yes, there can be benefits to paying your credit card early. But there’s more to understanding how making credit card payments could help you boost your credit scores.

Key takeaways

  • Paying your credit card early means paying your balance before the due date or making an extra payment 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.

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What happens if you pay your credit card early?

Paying your credit card bill early could simply mean making your monthly payment before the due date. Or it could also mean making an extra payment each month. Here’s how that might look:

  1. Make a full or partial payment before the billing cycle ends.
  2. Pay off any remaining charges once the card’s billing cycle closes but before the payment deadline. This period is known as the grace period.
  3. Make at least the minimum payment by the due date.

In some cases, making that early additional payment during your billing cycle may improve your credit in the long run.

Understanding credit card grace periods

Most credit cards have a grace period. It’s the time between the end of your billing cycle and the date your payment is due. And it can give you some breathing room between when you make a purchase and when you have to start paying interest.

If your card has a grace period, different factors might impact whether it applies to a purchase—like whether you’ve paid your previous balance in full by the due date each month.

You can check your credit card’s terms and conditions and statements to see whether it has a grace period.

Potential benefits of paying your credit card early

Everyone’s situation is unique. But, in general, making an extra payment toward your current balance before the last day of your billing cycle could have a positive impact. Take a closer look.

Paying your credit card early could help your credit score

By making an extra payment toward your current balance before the billing cycle ends, you can help lower your credit utilization ratio—the total percentage of available credit you’re using. And a lower credit utilization ratio could be beneficial to your credit scores. 

First, here’s some helpful information to explain what happens at the end of your billing cycle:

The last day of your billing cycle 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.

But what does that mean for your credit utilization? By making an early payment before your billing cycle ends, you can reduce the balance amount the card issuer reports to the credit bureaus. And that means your credit utilization will be lower as well, which can boost your credit scores. In fact, FICO® is pretty specific about what it views as the most important credit factors. And about 30% is based on this ratio. 

According to the Consumer Financial Protection Bureau (CFPB), experts recommend keeping your credit utilization below 30% of your available credit.

Credit card APR may not matter if you pay on time and in full

When you carry a balance from month to month on your credit card, your credit card issuer will likely charge you interest. But your annual percentage rate (APR) may only kick in for any remaining balances carried over to the next month.

This means paying your credit card balance in full every billing cycle can help you pay less in interest than if you carry over your balance month after month. But if you can’t pay your balance in full, the CFPB recommends paying as much as possible: “The higher the balance you carry from month to month, the more interest you pay.”

If you make an early payment before your billing cycle ends, you may be able to reduce your interest charges, even if you don’t pay off your entire balance. In fact, every little bit you’re able to pay toward a balance you’re carrying can help you chip away at what you owe. A credit card payoff calculator—like the one below—can be a useful tool to help you figure out how much you might be able to save.

Paying your credit card early could help you avoid late fees

Making your minimum payment during the grace period means you won’t risk getting hit with 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 company 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 need to make at least the minimum payment on your new bill.

Potential downsides to paying your credit card early

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

And 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 recommended to make the minimum payment by the due date.

When to pay your credit card bill

It’s a good idea to pay your credit card bill on time and in full each month. If your credit card charges interest on any balance carried over, costs can add up quickly. If you’re unable to pay your card in full, it’s important to at least make your minimum payment on time to avoid fees and help keep your account in good standing.

It may help to consider your credit card issuer’s statement closing date—or the last day of the billing cycle. This is when the issuer may report your balance to the credit bureaus. Paying your credit card bill before that date could lower your credit utilization ratio and help your credit scores. To find your statement closing date, contact the credit card company or review your credit card statement.

What is the 15/3 rule?

The 15/3 rule, a trending credit card repayment method, suggests paying your credit card bill in two payments—both 15 days and 3 days before your payment due date. Proponents say it helps raise credit scores more quickly, but there’s no real proof. Building credit takes time and effort. Practicing good financial habits and responsible credit use may help boost your credit scores in the long run.

When to pay a credit card in a nutshell

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, then you may want to consider making early payments on your credit card.

And if you’re looking for a card that could help you save money on interest, check out these low-interest and 0% intro APR credit cards from Capital One.

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