The Most Strategic Time To Pay Your Credit Card Balance

Oleh Admin 02 Mar, 2023 Posting Komentar

You know you have to pay your credit card bills on time and you always have to pay for things that aren't enough on your balance. But if you're having trouble managing your money, you may be tempted to pay off your credit card immediately after every purchase. This payment strategy will basically treat your credit card as a debit card. Here's what you need to know about the most strategic time to pay off your credit card.

Credit card payment basics

In order to learn how to best pay off your credit card, you need to understand the basics of your credit card statement. At the end of your billing cycle (usually every 30 days), you'll receive a statement with your current balance. This balance reflects all purchases made with your card during the billing cycle, as well as any outstanding or accrued interest from the previous billing cycle.

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Your statement will indicate the minimum payment you must make at a certain time (usually a few weeks after you receive your statement). Only the minimum payment is all you need to avoid delays, but you should always pay more to avoid compounding interest and debt.

You should always aim to pay your balance in full and on time. But here's why you shouldn't top up your balance too often.

What happens if you pay by credit card too often?

If you choose to pay off your credit card after every purchase, you will exacerbate your credit usage rate, which is 30% of your credit score. In most cases, lower utilization means a higher credit score, with the exception of 0% utilization.

The reason is that the credit bureaus don't receive your account information until the end of the billing cycle. If you always pay off the balance before getting the statement, it will be seen by the agent that you are not using the card at all. And without reviewing your credit history, you are undermining your credit health.

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The best credit card payment strategy

Unless you're really worried about accumulating debt, it's not wise to pay off all your credit cards at once. But if you want to improve your credit score, you'll have to wait until the statement date to pay off the balance. The downside is that you owe less than 30% of the total loan amount and always pay on time to avoid interest or late payments.

In the end, the best strategy for you is one that ensures you stay out of debt. Better to pay too much than not be able to pay at all.