If you are a regular credit card user, it is vital that you settle your bill on time to keep your credit score intact and avoid paying late fees and interest at an exorbitant rate. There is no denying that the best time to settle your credit card bill is before the due date.
Not many credit card users are aware that the 45-day (or 50-day) interest-free period is only offered if you settle your credit card bill on time. If you miss the deadline, interest will begin to accrue and the card issuer will also charge late fees.
In particular, in this case, interest will accrue from the date of the transaction and not from the last date of payment.
These are some of the most important points to consider when it comes to timing your payments to avoid additional interest.
Important points to remember
I. Pay before the due date: By paying off your entire balance by the due date shown on your statement, you will avoid interest charges, as most credit cards offer a grace period. This will also help you keep your credit utilization ratio low, positively impacting your credit score. Ideally, you should aim to keep your credit utilization below 30 percent.
II. Early in the billing cycle: If you make a payment soon after receiving your statement, rather than just before the due date, you actually reduce the balance reported to credit bureaus. This can improve your credit utilization ratio.
For example, if your statement closes on the 15th of the month, pay on or immediately after that date to keep the balance on your next statement low.
III. Multiple payments: If you use your card often, consider making multiple payments during the billing cycle. This can help keep balances low and assist with budgeting. This also prevents high expenses during the month from negatively impacting your credit utilization ratio.
IV. More than the minimum amount: Always keep in mind that if you pay only the minimum amount due, your account will remain current and you will owe interest on the remainder of the balance. So it is advisable to pay more than the minimum, ideally the full balance.
V. Set up automatic payment: To avoid late fees, consider setting up automatic payment for at least the minimum balance, and manual payments if necessary to cover the rest. In other words, you can pay as early as possible within the billing cycle to keep the balance low and avoid interest.
