Is It Bad To Pay Your Credit Card Bill Early? The Pros and Cons Explained

Paying your credit card bill early can seem counterintuitive After all, why pay a bill before you have to? But early payment can actually have some big benefits for your finances and credit score.

In this article, we’ll walk through whether it’s bad to pay your credit card early, the pros and cons, and when the best time is to pay off your bill. By the end, you’ll have a clear sense of if and when early payment makes sense for your situation.

What Does It Mean to Pay Your Credit Card Early?

When we talk about paying your credit card early, there are two main things this could mean:

• Paying your bill before the due date. Most credit cards have a grace period between when your statement closes and when your payment is due. Paying during this grace period but before the due date is considered early payment.

• Paying before your statement closing date The closing date is typically about 3 weeks before your due date Making a payment before this closing date is paying early,

Either of these options qualifies as paying your credit card early. The key is that you are paying some or all of your balance before the payment due date.

Is Early Payment Bad for Your Credit Score?

A common myth is that carrying a balance on your credit card can help build your credit score. But this isn’t true – carrying a balance just means paying interest and fees.

Not only is early payment not bad for your score, it can actually help in some cases! Here are two key ways early payment can benefit your credit:

• Lower credit utilization: Your credit utilization rate is the percentage of your total available credit that you’re using. Lower utilization is better for your score. By paying early, you lower your balance, which lowers your utilization.

• Less interest and fees: Paying early means you’re less likely to incur interest charges on purchases or late fees. This saves you money.

So early payment helps in two key areas – your credit score and your wallet. It’s a win-win.

When Does Early Payment Make the Most Sense?

Early credit card payment has clear benefits, but it may not make sense in every situation. Here are a few instances when early payment is your best bet:

You Can Pay Off the Full Balance

If you can pay off your entire credit card balance early, this ensures no remaining balance gets reported to the credit bureaus. That means you’ll have 0% utilization for that card, which is ideal for your credit score.

Paying in full before the closing date is great if you can swing it. Just be sure to leave enough in your bank account to cover any pending charges so they don’t overdraw your account.

You Want to Lower Your Interest

Most credit cards use your balance at the end of your billing cycle to calculate interest. If you make an early payment, especially right before the closing date, you’ll lower the balance used for interest calculations.

Even a small early payment can make a dent in the interest fees you’ll pay if you routinely carry a balance. Pay what you can early to chip away at interest.

You’re Worried About Late Fees

We’ve all been there – a payment due date sneaks up on you. Paying early, even just a few days before the due date, guarantees your payment will be on time and avoids the risk of late fees.

For peace of mind, consider scheduling payments through your bank or card issuer’s website. Just pick a date a bit before your bill is due.

You Have a Major Purchase Coming Up

Let’s say you need to buy airline tickets for an upcoming trip and know it will be a large expense. Consider making an early payment on your card a week or so beforehand if you can.

This lowers your utilization ahead of time so the big ticket purchase doesn’t drive your utilization way up and negatively impact your credit.

When Might You Want to Avoid Early Payment?

While early payment is generally a smart money move, there are a couple cases when you may want to hold off:

• You have a 0% intro APR: If your card offers a promotional 0% APR on purchases, you can wait to pay those purchases off until after the promo period since no interest will accrue. Focus on paying off higher interest rate balances first.

• Cash flow is tight: Don’t pay early if it means you won’t have enough left over to cover other expenses that month. Paying the minimum by the due date is fine in tight months.

As long as you don’t fall into one of the above situations, early payment is typically a smart play. But focus on meeting the minimum payment by the due date if cash flow is tight.

Tips for Paying Your Credit Card Bill Early

Here are some tips to make early credit card payment as easy and effective as possible:

• Review statements closely: Log into your account often to review pending charges. This helps avoid accidental overpayment.

• Automate it: Set up automatic payments through your card issuer to have payments go out a week or so before the due date.

• Note the closing date: Mark your closing date on your calendar to remember to pay before then to lower utilization.

• Break it down: Rather than one big payment, consider weekly or bi-weekly smaller payments to keep utilization low.

• Watch for fees: Some cards charge a fee for early payment. Make sure to review the terms or call your issuer to confirm.

The Bottom Line

Paying your credit card bill early has clear benefits – it can help lower your credit utilization, save on interest, avoid late fees, and take a proactive approach to large purchases.

Situations when you may want to avoid early payment include having a 0% APR promotional offer or extremely tight cash flow. Otherwise, early payment is typically a smart financial move.

Use the tips above to get started paying your credit card early and see the benefits for yourself. Keep a close eye on statements, automate payments, and pay multiple times per month if possible. With some planning, early payment can become an easy habit.

So is it bad to pay your credit card early? Not at all. In most cases, it’s just the opposite – a savvy financial decision. Use early payments to take control of your credit and maximize savings.