5 Benefits of Paying your Credit Card Bill Before Due Date

There are plenty of good reasons as to why you should never be late on paying your credit card bills. However, there are also some compelling reasons as to why you should consider paying them early. Although it may seem to go against common sense to turn in your credit card payments before the due date, it is actually a very smart idea to pay your credit card bills early. Here are five very good reasons to pay your credit card bills early every month.


Save Money on Interest

Carrying a balance on your credit card account means that you’ll accumulate interest charges every day depending on your daily balance. When you make a payment on your credit card before it’s due then you are lowering your daily balance, which will then reduce the interest you’ll be charged by a significant amount. You can also think of it as the fact that because you are earning only a very small amount of interest by letting your money rest in a savings or checking account, but are paying more for letting high-interest credit card debt remain on your credit card account then you can save money by making credit card payments as soon as possible. If you want to know exactly how long it will take to pay off your credit card balance then go online to find a credit card debt calculator.


Increase Your Credit Score

When the statement period ends on your credit card, and the statement is issued then the balance will be reported to all of the major credit reporting agencies as open debt. This is still the case even if you are able to avoid paying interest on your debt by paying the amount in full on the due date. The debt that’s reported will lower your credit score if you have a high balance during the month. By paying off all of your balance, or at least some of it, before the statement cycle closes then you will reduce your debt-to-credit ratio and thus increase your credit score. This can be a huge factor if you are attempting to apply for another line of credit or for a home mortgage.


Pay Down Your Debt Sooner

By making early payments on your credit card you are putting your funds to good use by committing them to pay off your debt instead of just planning on paying it off at a later date. This means that your debt will be completely paid of sooner, and the funds that would have otherwise been available to you to use for discretionary expenditures will be unavailable to you and so you won’t spend it on unnecessary items. This will allow you to save money.


Free Your Line of Credit

If you are anticipating the need to make a rather large purchase then this can cause you to use up your entire line of credit before the payment on it is even due. This can be especially the case if you are looking at a standard statement period of around 30 days long, as well as the grace period, which is the time between when the statement closes and when the payment is due, which can be between 21 to 25 days long.


Can Mess With Travel Holds by Car and Hotel Agencies

If you have any plans to travel in the near future then you may find that rental car agencies or hotels will put a hold on your account. This will cause even less of your credit line to be available, as it will take up a substantial amount of your available credit. By ensuring that your debt to credit ratio is low, you’ll make sure that you have enough free credit for these agencies to put a hold on your account without causing all of your available credit to be used up. This will ensure that any charges you make will be approved so that your traveling goes smoothly.


When You Shouldn’t Pay Your Bills Early

While there are several good reasons why you should pay your bills early every month, there are some cases in which you shouldn’t do so as it will not be beneficial to your financial situation. If you always avoid paying interest by paying down your credit card in full each month, and you don’t utilize a substantial amount of your credit line then waiting until your due date in order to make a credit card payment can actually be ideal as there won’t be any repercussions for not doing so. This is because you won’t be saving any money by not getting charged interest from paying down your bill early, and additionally you will be able to keep your funds in your bank account for as long as possible



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