Clear Your Credit Card Balance Before It’s Due
Better late than never? Here’s a situation to which this adage doesn’t apply: there are plenty of reasons to not pay your credit card bill late, but as it turns out, there are many compelling reasons to pay it before the due date!
- Free up your credit
If you’re planning to make a big purchase with your credit card, you can free up your credit by paying what’s due in advance, right before your statement closes.
This is especially useful if you’re travelling and have holds placed on your account by hotels or rental car agencies. It helps free up your line of credit, thus ensuring approval of all future charges. Moreover, it is possible for a card to be declined when you use most of the available credit or reach the card’s limit. Improve your credit score
After your statement ends and is issued, the balance that remains is reported to credit bureaus as debt. If you manage to pay off your debt or a part of your debt before the statement is issued, you can lower your debt-to-credit ratio and improve your credit score, which proves to the bureaus that you are creditworthy. When you use up most of your available credit, credit-scoring models consider it a signal of financial trouble. Mostly, using less than 30% of the available credit is preferable, while 10% is ideal.
After your statement ends and is issued, the balance that remains is reported to credit bureaus as debt. If you manage to pay off your debt or a part of your debt before the statement is issued, you can lower your debt-to-credit ratio and improve your credit score, which proves to the bureaus that you are creditworthy. When you use up most of your available credit, credit-scoring models consider it a signal of financial trouble. Mostly, using less than 30% of the available credit is preferable, while 10% is ideal.
You Might Also Like: Setting Spending Limits With Your Bank Or Credit Card
- Track your expenses
If you get into the habit of paying what’s due on your credit card regularly, you essentially check your expenditure, and in this process, make mindful decisions about when you spend and on what. - Pay less interest
Interest on credit cards is charged on your daily average balance. When you pay your bill before the cycle ends, you lower your daily balance, thereby reducing the interest charged. If you pay your credit card bill in full each month, you will be rewarded with an interest-free grace period that usually lasts until the next due date. - Decrease your debt
By making an early payment, you end up saving yourself from a debt you might find hard to pay. If you regularly pay your dues on time, you are unable to change your mind and spend on something that is not really required. It’s a win-win situation! - Pay early and get rewarded
To ensure that interest doesn’t cancel out the value of credit card rewards such as cash back and travel miles, pay your credit card bill early and lower your interest charges. - Don’t worry, be happy!
Bills have a tendency to make you worry if you do not have total control over them. When you pay bills only when it’s right on top of your head, mistakes could occur, and you could end up feeling stressed and anxious. To avoid such a scenario and to always be ready for the next big steps in your life, ensure you pay your dues regularly and before time!
Keep yourself updated with the latest on Credit Cards . Like us on Facebook and follow us on Twitter for more on Investments.
Disclaimer:
The content provided on our blog site traverses numerous categories, offering readers valuable and practical information. Readers can use the editorial team’s research and data to gain more insights into their topics of interest. However, they are requested not to treat the articles as conclusive. The website team cannot be held responsible for differences in data or inaccuracies found across other platforms. Please also note that the site might also miss out on various schemes and offers available that the readers may find more beneficial than the ones we cover.