This is the best time to pay your credit card

Paying your credit card bill early is an easy way to clear the task off your list so you don’t forget to pay before the due date.

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Making payments on time is the minimum requirement for maintaining a good credit rating.

Prepayments can also have a beneficial impact on your credit score. However, you might be paying too soon, reports Times magazine.

Here’s a guide to help you decide if credit card prepayments are right for your financial situation.

A credit card’s billing cycle is the time elapsed between statement closing dates. It lasts about a month and is usually between 28 and 31 days.

Your statement balance will be increased by a combination of the following transactions:

• Outstanding balance from previous credit card statement
• Purchases made during the current billing cycle
• Advances taken during the current billing cycle
• Balance transfers made during the current billing cycle
• Interest charges on past outstanding balances
• Issuing company fees

Certain other transactions will reduce your statement balance:

• Payments you made
• Issuing Company Reporting Credits

The statement balance is also used to determine your minimum payment. Your credit card payment will usually be due 20-25 days after your statement date. Your next billing cycle begins immediately.

There are two very important dates you need to remember every month when you have a credit card. Your billing due date is the same day each month. It only varies when the due date falls on a public holiday or a weekend, in which case it will be postponed to the next working day. The billing cycle, as mentioned above, can vary by a few days depending on the number of days in the month.

The statement close date is the last date of your statement billing cycle. All transactions that have been paid and are not yet pending payment as of the statement closing date will appear on your credit card statement. The next date is the start of the next billing cycle. All transactions paid after the statement closing date will appear on the next credit card statement.

The billing due date is the date by which you must make a payment or incur interest charges. If you pay your bill in full before the billing due date, you’ll waive interest charges completely, according to Times magazine.

If you make at least the minimum payment, you will start incurring interest charges on the outstanding balance, but you will retain your reputation with the issuer. You may be able to avoid interest charges on an outstanding balance if you are in a 0% Annual Promotional Rate (APR) period.

Benefits of paying your bill earlier

There are several benefits to paying your bill early, according to the Times, here they are:

• You’ll save money on interest charges by paying your bill in full sooner.
• You won’t have to worry about forgetting to make a payment before the billing due date if you’ve already paid your bill.
• You can even improve your credit score by reducing your credit card balance throughout your billing cycle.

Paying your credit card bill early is a great idea in many cases. However, there are several reasons why you might not want to pay your credit card bill sooner.

You may still owe a second payment if you pay too soon

If you send your payment before the statement closing date, it will be applied to the current billing cycle and reduce the balance that appears on the statement. If after your prepayment you still have a balance on your statement, you will still have a minimum payment due by the billing due date to keep your account in good standing. If you don’t make the minimum payment between the statement closing date and the billing due date, you risk losing your reputation with the issuer.

To keep money in your bank account for emergencies

If you are consistently below your 30% credit utilization rate and always make your monthly payments on time, you may prefer to keep the money in your bank account for emergencies. Some sellers do not accept credit card payments. If you have a problem that requires cash or a check, you will need to have the money in your bank account.