Does it matter much when you pay your credit card bill? As long as the lender gets some money sometime, it doesn’t make any difference to them – does it? Lenders are big companies and after all you’re just one person.
The reality is that it does matter. And it does make a difference, not just to the lender, but to you too, because when you pay your bill affects your all-important credit score, and could make it more likely that you’ll need credit repair.
To learn about the importance of making payments on or before the dates that affect your credit, read on.
Credit Card Dates to Know
Every month your account has a closing date. It’s not necessarily the first or last day of the month—it can be any day. Let’s say it’s the 15th, and imagine that we’re in the month of August. Any charge you made from July 16th—the day after last month’s closing date—through August 15th will show up on the next bill the lender sends you. The period from the 16th of one month through the 15th of the next month is called your billing period.
The other date to know is your payment due date. This falls after the close of your billing period, usually 30 days. For our hypothetical July 16-August 15 billing period, the payment due date would likely be September 15th. If you pay off the entire balance by that date, you will not be charged any interest. It’s only when you carry over a balance that you’re charged interest.
Pay Your Balance, Help Your Credit Score
Credit card companies use the date at the end of the billing period to calculate your credit utilization rate (the amount of your credit limit that you’re using), expressed as a percentage. For the health of your credit score, the lower the better is the rule. So, if you’ve run up a high balance on a credit card with a low limit, it’s wise to pay it down a little before the end of the billing period to keep the credit utilization rate low on the day it’s calculated.
How Much of Your Credit Card Balance to Pay
All of it, if you can.
Paying the bill each month, in full, is the only way to avoid interest charges. It might cost you less in the long run to write a big check for the whole amount than to pay just part of it. You’ll have to pay interest on the rest for as long as it takes to pay it off.
Most people do carry over a balance. If you do, be sure to pay at least the minimum payment requested by the due date. If you don’t, you’re subject to late fees and worse, damage to your credit report that could require credit repair.
Like any other tool that gets regular use, your credit card and credit score stay in better shape with a little regular maintenance, like paying on time and keeping balances low. But if you need a bit more help, contact a credit repair agency such as Ovation. We can provide the fix you need to get your credit humming again.