When Should I Pay My Credit Card Bill To Avoid Interest?

Paying credit card interest can be an expensive burden According to the Federal Reserve, the average credit card interest rate is over 16% APR With interest compounding daily, carrying a balance from month to month can add up quickly. The good news is paying interest is completely avoidable with proper credit card bill timing.

How Credit Card Interest Works

When you use your credit card, the credit card company loans you money. If you pay back the balance by the due date, there is no cost. However, if you carry a balance past the due date, the lender charges you interest on the outstanding amount. Here’s how it works:

• You make purchases throughout your billing cycle. This period usually lasts around 30 days

• At the end of the billing cycle, the credit card company totals up all the charges and sends you a statement. This is your bill for the billing period.

• The statement has a due date, typically 25 days after the statement closing date. This is the deadline to pay your balance without accruing interest charges.

• If you don’t pay the full balance by the due date, interest is applied to the remaining balance. Interest accrues daily based on your APR.

• The cycle then repeats each month. Interest will continue compounding daily until you pay off the full balance.

Avoid Interest by Paying in Full Each Month

The simplest way to avoid credit card interest is to pay off your full statement balance every month by the due date. This strategy, often called pay-in-full, ensures you never pay a penny of interest.

To put the pay-in-full method into practice:

• Review your monthly statement and note the full statement balance and due date.

• Budget accordingly and pay the full statement balance by the due date every month. Set a reminder if needed.

• If you cannot pay the full amount, pay as much as possible by the due date to minimize interest charges. Then make a plan to pay off the remaining balance as soon as feasible.

As long as you pay your full balance on time every month, you can use your credit card for purchases without incurring any interest whatsoever. This approach allows you to enjoy the convenience and benefits of credit cards without the high cost of interest.

Maximize Your Grace Period

Most credit cards have a grace period, which is an interest-free period between the end of a billing cycle and the due date. Grace periods typically range from 21-28 days.

You can maximize this grace period to avoid interest by timing your payments:

• Make purchases early in your billing cycle to maximize the grace period.

• Pay off your balance in full every month before the due date.

• Avoid cash advances and balance transfers, which begin accruing interest immediately.

As long as you pay the monthly balance on time and in full, you will never pay interest on your purchases thanks to the grace period. Just be sure to avoid cash advances and balance transfers which void the grace period.

Pay Multiple Times Per Month

Another option is to make multiple smaller payments during the billing cycle rather than one large payment at the end.

For example, you could:

• Make weekly or bi-weekly payments to chip away at your balance.

• Pay half the balance when you get your statement, then pay the rest before the due date.

• Pay your current charges in full each week.

This split payment method allows you to pay down your balance faster and minimize the average daily balance that gets hit with interest. Just be sure your total monthly payments add up to the full statement balance to avoid any lingering interest charges.

Time Payments Around Your Pay Schedule

If your income flucuates, consider timing your credit card payments around your pay schedule.

For instance, you could:

• Make a payment right after each paycheck to pay down your balance.

• Hold off on using your card until after you get paid, then pay that balance off when your next check comes in.

• Pay your estimated balance in advance before a large purchase.

The key is making sure you have the cash in hand to cover your credit card payments before interest accrues. Avoid spending more than you can afford to pay off each month.

Set Up Autopay

For the most effortless approach, enroll in autopay directly through your credit card issuer. This automatically pays at least your minimum payment each month, but you can set it to pay your full balance.

With autopay, your payment is made on time every month, preventing late fees and interest charges. Just be sure you have the funds available to cover the payment.

Submit Payment 5-7 Days Before Due Date

To allow a buffer for any processing delays, consider submitting payments at least a week before the official due date. This helps ensure your payment is applied in time to avoid interest.

For example, if your statement says your minimum payment is due on the 5th of the month, you could pay on the 1st. Even if processing is delayed a couple days, your payment should still post before the due date deadline.

Take Advantage of a 0% APR Introductory Offer

If you need to carry a balance short-term, consider applying for a card with a 0% APR introductory period. These offers allow you to postpone interest for 12-18 months, depending on the card.

To maximize a 0% intro APR:

• Make a plan to pay off your entire balance before the intro period ends and interest kicks in.

• Avoid additional purchases on that card until the existing balance is paid off.

• Be mindful of balance transfer fees, which often apply.

Ask Your Issuer to Waive Interest Charges

If you do wind up with an interest charge, it never hurts to call your credit card company and politely ask them to waive it. Issuers often will grant a one-time courtesy fee reversal if you have a good payment history.

Just explain your situation sincerely and kindly request that the interest charge be waived. The worst they can do is say no.

Switch to a Lower Interest Card

If you are carrying an ongoing balance, your best bet is to switch to a lower interest credit card. Look for cards advertising low promotional rates or ones with lower ongoing APRs.

Start by checking for offers from your current issuer. Existing customers often get offers to transfer balances to lower rate cards. Opening a new card just for the lower rate can save you hundreds in interest each year.

Summing It All Up

To recap, here are my top tips for avoiding credit card interest:

• Pay your statement balance in full every month – This ensures you never pay interest on purchases.

• Maximize the grace period – Time payments to take full advantage of the 21-28 day grace period.

• Make bi-weekly or multiple payments – Pay down your balance faster.

• Match payments to your pay schedule – Time payments so you always have cash to pay your bill.

• Use autopay – Set up automatic payments to avoid late fees and interest.

• Pay 5-7 days early – Allow processing time for payments.

• Leverage 0% intro APR offers – Use temporary 0% rates to pay down balances.

• Ask for a waiver – Politely request a one-time waiver of an interest charge.

• Transfer to a low interest card – Cut interest costs dramatically.