Paying your balance on time keeps your account in good standing and leads to a healthy credit report. But if you fail to pay your balance on time, you could end up being charged a late payment fee, a penalty APR and it could leave a stain on your credit report for the next seven years.
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When is the best time to pay your credit card bill?
Your due date varies between card providers, but it’s often between 21 and 25 days after the statement is issued. By this time you must pay at least the minimum payment found on your statement — which is between 1% and 3% of your balance — to avoid paying late payment fees and a penalty APR (annual percentage rate). Learn all about your credit card’s APR and how interest works here.
But if you only make the minimum payment, you will start accruing interest on your remaining balance, which is your card’s standard APR on purchases, often ranging between 12% and 23%. The only way to avoid paying any fees or interest is to pay your balance before the due date.
How to pay your credit card bill on time
These tips are key to maintaining a good credit card payment history.
- Work with a budget.
Create a budget to factor your credit card payment into your regular expenses so you have enough set aside to pay your bill by the due date. To avoid excessive interest charges, always aim to pay more than the minimum required each month.
- Change your payment due date.
If it’s a matter of streamlining your finances, you may want to request a change to your statement due date. Some card issuers let you move your statement date closer to your payday.
- Use autopayments.
You can set up autopayments for the minimum, full or a partial amount of your credit card balance each billing cycle. With this service, your transaction account is automatically debited to pay your credit card on the same day every month.
- Modify your payment frequency.
If you get paid weekly or biweekly, you may want to make a payment on your credit card as soon as that money lands in your bank account. This could help you stick to your budget by taking away the temptation to spend more money before your due date.
- Set calendar reminders and use online banking services.
Take the time to set up calendar notifications and download banking applications so you’re informed about your finances. Check to see what options your credit card company provides and opt-in if you often forget to make a payment on time.
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What are the benefits of paying your credit card bill on time?
- No late payment fee.
Make your credit card payment by the statement due date and you’ll avoid the late payment fee.
- Save on interest.
Paying your entire credit card balance will help you avoid paying the APR on purchases. Keep in mind, cash advances don’t have a grace period of up to 25 days, so try to avoid them or pay them as soon as possible.
- Improve your credit score.
Maintain a good payment history to keep your credit report healthy.
How to make credit card payments
Credit card companies make it easy to pay your credit card balance using online banking and other options. These payment details are listed on your statement. Here are a few ways you could make credit card payments:
- Internet banking.
Link your credit card, transaction account or savings account using Internet banking. You can make credit card payments with a couple of clicks.
- Mobile app.
Most banks offer mobile apps where you can monitor your accounts and make payments through your phone.
Download and complete an autopayments form to debit funds from a nominated transaction account.
- At a branch.
Make a cash or cheque payment in person at a branch.
There are many reasons why you may not be able to pay your credit card bill on time each month, but making this a priority is important. Whether it’s debt troubles, forgetfulness or an unexpected event, putting these tips and tricks into practice can help you stay on top of your payments every month and help you reap the benefits.
Now that you know how to pay your credit card bill on time, make sure you choose the right credit card for your needs by comparing your options.