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The timing of your credit card payments can be quite important, especially if you’re eager to increase your credit score.
The timing also can effect how much interest you pay if you have revolving credit card debt.
There are two important things to consider here:
- your due date
- your statement/closing date
Your due date is when your minimum payment is due. It can be anytime in the month, but it will always be on the same date each month, unless you request a change.
The due date is determined by the credit card lender and should be displayed as soon as you log on to your account.
Your statement date or closing date is when charges are calculated and added, AND when your lender typically reports that information to the credit bureaus.
At the very least, pay your minimum balance by the due date.
By paying by the due date you won’t incur any fees and you won’t hurt your score.
However, the best time to pay down your credit card is before the statement date.
Let me break this down with some examples:
Example 1
Let’s say you have no revolving credit card debt but you still use your cards. Your credit card due date is the 15th of the month, but your statement date is usually the 18th.
You pay your balance in full by the due date (15th), but then decide to make a $1,000 purchase on the 16th and decide you’ll pay it off by the next due date. Well now, that $1,000 balance will be reported to the credit bureaus on the 18th and could lower your credit score.
You wouldn’t gain interest in this situation, but it will effect your score.
Example 2
Let’s say you have revolving credit card debt and are trying to pay it down. Your due date is the 1st and your closing date is the 11th.
You’ll pay your minimum balance by the due date.
Then you get paid again and/or have extra cash to make debt payments. To increase your credit score, pay down as much of your credit card as you can before the statement date.
The lower balance will be reported and increase you score.
Interest
As I mentioned, you’ll also save money in interest by doing this. If you pay your card in full every month, you shouldn’t pay interest at all. However, if you don’t that’s a different story.
Your statement date is when finance charges are calculated and these are an accumulation of interest charged daily.
You won’t see those charges on a daily basis, but you’ll see it all piled onto your balance by that date.
The less money you owe by that date, the less you will be charged in interest.
If you have revolving credit card debt, make your minimum payment by the due date, then charge just as much money by the statement date, you can expect your balance to possibly be even higher than before.
Ideally, you want to have $0 of revolving credit card debt and only using your card to take advantage of points/cash back.
And if you have revolving credit card debt that you’re working on paying off, I would suggest not using your cards at all while doing so.
