When Should I Pay A Bill? A Complete Guide

Paying bills on time is an essential part of maintaining good financial health. However, deciding exactly when to pay each bill can be confusing. Should you pay as soon as the bill arrives or wait until the due date? Here is a complete guide to help you figure out the optimal time to pay different types of bills.

Pay Bills Before The Due Date To Avoid Late Fees And Interest

The most basic rule is to ensure you pay your bills before the due date printed on your statement. Missing the due date can lead to late payment fees interest charges and even service disruption in some cases.

Here are some types of bills you should always aim to pay early:

• Credit Card Bills – Credit card companies typically give you a grace period of around 21-25 days to pay your balance before charging interest Pay at least the minimum payment before the due date to avoid interest and late fees

• Mortgage/Rent – Mortgage and rent payments are often due on the 1st of the month. Pay these as close to the due date as possible to avoid any issues. Even being a day late can lead to late fees.

• Car Loans – Car loan due dates are also strict. Try to pay a few days early just to be safe. Late payments may incur fees and also damage your credit score.

• Electricity, gas, water, and the internet are all utilities that you don’t want to go down. Pay before the due date to keep them running.

Pay Credit Cards Before The Statement Closing Date To Improve Credit Score

Now while paying the minimum by the due date is necessary to avoid penalties it may not always be the optimal strategy for credit card bills specifically.

A big part of your credit score is your credit utilization ratio, which shows how much of your total credit limit you are actually being used. And credit card companies tell the credit bureaus your utilization ratio based on the amount of money you owed when your statement ended, not when it was due.

Therefore, to keep your utilization low and improve your credit score:

• Make additional payments during the billing cycle to lower your balance
• Pay off most or all of your balance a few days before the statement closing date rather than waiting until the due date

This way, the balance reported to the credit bureaus is lower, helping improve your score.

Example:

• Statement closing date: 15th of the month
• Due date: 10th of next month
• Payment on 12th keeps utilization low for credit reporting

Just be sure to still make the minimum payment by the due date as well to avoid interest and fees.

Schedule Bill Payments To Align With Paychecks

Budgeting experts often recommend aligning your bill payment schedule with your paycheck schedule as much as possible.

For instance, if you are paid biweekly:

• Week 1 – Pay utilities, internet, cell phone bills
• Week 2 – Pay rent/mortgage, insurance, loan payments
• Week 3 – Pay utilities, internet, cell phone bills
• Week 4 – Pay rent/mortgage, insurance, loan payments

This ensures your money coming in helps cover the bills going out. Having a clear bill payment schedule like this makes it easier to budget and avoid missing payments.

Some additional tips:

• See if your utility company offers budget billing to even out payments
• Consider paying some bills annually or semi-annually to reduce hassle
• Sign up for autopay through your bank to schedule automatic payments

Pay Down High Interest Debt More Aggressively

Now let’s discuss how bill payment strategy can help you pay down debt faster and save on interest charges.

If you have credit card balances or other high interest debt, any amount you pay above the minimum payment goes directly towards reducing principal. This method is known as the “debt avalanche” – aggressively paying down your highest interest debt first.

So you have some options:

• Make an extra principal payment as soon as you have spare funds rather than waiting until the due date. This will reduce the average daily balance that interest is calculated on.

• Pay a certain amount weekly or biweekly instead of monthly to bring down the balance faster.

• Pay half the balance mid-cycle and the rest on the due date. This also lowers the average daily balance.

The quicker you can pay down high interest balances, the less total interest you will pay over time. Crunch the numbers to figure out a payment schedule that works for your financial situation.

Set Payment Reminders To Avoid Forgetting

With so many bills coming due at different times each month, it can be difficult to remember to pay everything on time. Setting up reminders can help:

• Note due dates on your calendar and set alerts
• Sign up for email or text alerts from billers
• Use budgeting apps to track bills and get reminders
• Ask a family member or friend to nudge you
• Display a bill checklist on your fridge or desk

Ideally, you want a system that prompts you to pay each bill 3-5 days before it is due. This gives you a buffer in case of errors or delays with payment processing.

Determining the optimal time to pay bills depends on the type of bill and your financial goals at the moment. Pay essential expenses like rent and utilities before the due date to avoid disruptions. Make credit card payments before the statement closing date to help your credit score. Use payment reminders and your paycheck schedule to make bill paying easier. And pay down high interest debt aggressively to reduce the total interest cost. Adjust your approach as needed to take control of bills and maximize your money.