When Is the Best Time to Pay Your Credit Card Bill?

Paying by the due date keeps you out of trouble. Paying a few days before your statement closing date is what changes your credit report — because that's the balance most issuers send to the bureaus. Here's where the closing date, the due date, and the cutoff time each actually matter.

The best time to pay your credit card bills

Paying on or before your statement's due date is best for avoiding fees and unnecessary interest. Miss it and three things can follow, each on different timelines:

• A late fee right away
• A mark on your credit report once you're 30 days late
• A penalty rate that can be applied to the balance you already carry after the issuer goes 60 days without your minimum payment

On or before the due date

At a minimum, make your payment on or before the due date to avoid:

• Late fees
• Credit damage, which usually happens if payments are more than 30 days late
• Penalty APRs, which generally only apply if payments are severely delinquent

Late payments can also cause you to lose your grace period. This means that on your next billing cycle, interest will start accruing on your purchases immediately. If you repeatedly make late payments, your credit card issuer may even close your account.

Read more >> Credit Card Closing Date vs Due Date: What's the Difference?

Before the statement closing date

Making a payment before your statement closing date is even better. Your statement closing date is the last day of your billing cycle. It’s the day your credit card issuer calculates interest and reports your balance to the credit bureaus.

Making your payment before the statement closing date can be helpful for two key reasons:

• You won't pay as much interest on lower balances carried
• Balances reported to credit bureaus will be lower

Paying before your statement closing date lowers your average daily balance, which is how most issuers calculate interest. (If you pay in full within the grace period, you typically aren't charged interest on purchases at all.)

Two different dates matter. Your issuer reports your balance on the statement closing date, not the due date. Whatever you owe that day is what the bureaus see, so paying before it lowers your reported balance. Check your statement for the exact date.

Multiple times per month

Some people prefer making multiple payments each month. If you’re currently carrying a balance from month to month, this method can help you lower the total interest you pay. Because interest rates are calculated based on your average daily balances, making multiple payments each month keeps that average lower.

But this method comes with potential challenges. For one, multiple payments can make budgeting harder. And you might not be able to schedule multiple automatic payments each month, needing to set reminders elsewhere.

Read more >> How to Read a Credit Card Statement

Does it matter when you pay if you pay in full each month?

Even if you pay your statement balance in full and don’t carry a balance, when you pay matters. For instance, if you pay in full each month on or before your due date, you can avoid owing interest.

Credit card companies give you a “grace period,” which is the time between your statement closing date and the due date. For most credit cards, as long as you pay your whole statement balance during this time every month, you won’t be charged interest on purchases.

Even if you pay in full each month, though, your reported credit utilization — or the percentage of your available credit you're currently using — could still be high. Credit card companies report your balances to credit bureaus on your statement closing date.

If you want your total credit utilization to be lower, consider paying before the closing date. That way, the balance reported to credit bureaus may be lower or even $0, but reporting timing varies by issuer and payment posting or cutoff times can affect what gets reported.

Read more >> How to Lower Your Credit Utilization

Does it matter what time of day you pay?

Issuers set a daily cutoff for payments, and federal law says it can't be earlier than 5 p.m. on the due date, but that's 5 p.m. wherever your issuer receives payments, not where you live. If their center is on the East Coast and you're in California, your real deadline is 2 p.m.

Many issuers give you longer for online payments. Read your cardholder agreement for the exact time.

Miss the cutoff, and your payment counts as the next day. That matters on the due date, but also the night before your statement closing date, if you're trying to lower the balance your issuer reports.

Bottom line

Pay by the due date so nothing goes on your report, and pay before the closing date if you want the reported balance to be lower.

Both are worth doing, but neither one accumulates. Rather, utilization is recalculated from scratch every month, so a well-timed payment in March does nothing for you in June.

Payment history is the part that builds. Kikoff's Credit Account reports to Equifax, Experian, and TransUnion each month, with no hard credit check. Plans start at $5 a month.