How often do you pay off your credit card balance? Some always pay their monthly bill by the date on their credit card statements. Some people have a revolving balance from month to month, but they always pay at least the minimum amount due by the due date.

Is there an optimum time of day to pay a credit card bill? Before we get into that, let's go over a few reasons you should pay your account on time. A financial adviser can help you create a financial plan if you have a solid salary but need help managing it.

The Value of Prompt Payment of Bills

Lenders widely use the FICO scoring methodology to evaluate applicants' creditworthiness. Three-fifths of your credit score in that system comes from how reliably you make payments. Hence, your credit score might be hit if you have a history of paying your bills late.

There's more than one good reason to focus on eliminating your credit card debt. One kind of revolving credit is the credit card. Revolving credit accounts, in contrast to installment credit accounts like mortgages and student loans, allow you to borrow money as you need, within limits.

You are not required to pay your account in full each month, and you can carry a debt from month to month if you want. Revolving debt is usually more significant than installment debt regarding the FICO® credit score. Late payments on any debt can hurt your credit score, but credit card payments can be especially damaging.

Thirty percent of your FICO® score is based on the total amount of debt you have. The percentage of how much of your available credit you're using is a significant aspect of this metric for your revolving credit accounts. If you fail to make your credit card payments on time and have already made substantial use of your available credit, your credit score may suffer a major hit.

Reasons to Pay Down Your Credit Card Balances Early

Paying your credit card account when it's due is smart, but paying it might earn you a discount. This can be explained if you are familiar with your billing cycle. Typically, credit card companies use a billing cycle of between 29 and 31 days to process payments.

Your billing statement will close on the final day of your billing cycle. Most credit card companies submit your balance to credit reporting agencies as of this date. Your payment is due on a date that is not the same different from the date.

Your credit card payment is officially due at the coalition of the grace period, anywhere from 21 days to 25 days. Make it look like you have less credit card debt by paying before the due date. Consider a hypothetical credit card with a $3,000 limit.

Spending $2,500 but paying off $1,700 before the due date will result in an $800 balance reported to the credit agencies. I don't see the benefit in that. Using our scenario as an example, the credit reporting companies would estimate your credit usage ratio to be 26.7%.

Improving your credit score is possible by reducing your credit use percentage. Maintaining this number below 30% is recommended if you want a better FICO score.

Paying Down Your Credit Card: When to Do It

Suppose you can pay off your credit card on the due date; even better. You should pay at least some of your payment before the due date. Nonetheless, your credit usage ratio should be above 30% before you make a payment.

You can safeguard your credit rating by monitoring your credit usage ratio and maintaining it as low as possible. In addition, you won't need to keep track of the reporting date for your credit report. You may get your credit usage ratio by dividing your credit card debt by your available credit. Then, double that by a hundred.

The percentage of total debt to available credit is another factor reported to credit agencies. Calculate this by dividing the amount you owe on all your credit cards by the total amount you have available for credit.

The Bottom Line

Are you attempting to schedule your credit card payment for maximum benefit? Make sure you pay your account on time to avoid incurring interest and penalties for late payments. However, if you want to increase your credit score, you should pay before your statement closure date or if your debt-to-credit ratio gets too high.