Staying on top of your credit card bills is a key part of building and maintaining strong credit history.
Payment history is a key component of your credit scores and missing even one payment could have an impact. Fortunately, it doesn’t take too much effort to manage once you know what to look out for.
So what, exactly, do you need to know about paying your monthly bill? Here’s a brief overview that can help you get — and stay — on top of your payments.
- 3 tips to help you stay on top of your payments
- Should you carry a balance on your credit card?
- When should you pay off your credit card balance?
3 tips to help you stay on top of your payments
Understandably, life can get busy and it can be challenging to keep up with your payment due dates. So how can you make sure you don’t miss a payment?
- Consider setting up direct debit for your credit card bills — but make sure you have enough in your bank account first.
- Alternatively, set up text or email alerts to be notified when your payment due date is coming up.
- If you have multiple credit cards, consider requesting the same payment date for all your accounts. You can generally do this either by calling up your card provider or making a request online. This way, you don’t have to keep track of multiple payment dates.
Should you carry a balance on your credit card?
Many people believe that you need to carry over a balance from month to month on your cards in order to build credit, but that’s just a myth.
What actually helps build credit history is regularly paying your credit card bill on time. In fact, if you carry a balance, you may end up having to pay hefty amounts of interest with no benefits to your credit history whatsoever.
We recommend avoiding carrying a balance whenever possible. In the case that you’re unable to pay off your balance in full, ensure you make at least the minimum payment.
If your credit card balances are starting to build up and you’re getting caught up in interest payments, you may want to consider a balance transfer card, such as a card that offers a 0% introductory APR period. You should also check in with your provider.
When should you pay off your credit card balance?
Paying your full statement balance on or before the due date can help you save on interest charges. You can improve your credit utilisation ratio and your credit health by paying your current balance in full by its deadline.
If your credit utilisation (the total amount of credit you’re currently using divided by the total amount of credit you have available) is on the higher end, you might consider making multiple payments each month, as this can reduce your credit utilisation rate. It’s generally recommended to keep your overall credit utilisation below 25%.
Generally, as long as you consistently pay off your statement balance in full by its due date each billing cycle, you’ll avoid having to pay interest charges on your credit card bill. This is why you should strive to pay off each billing cycle’s statement balance by the due date whenever possible.
Paying off credit card bills — or any bills, for that matter — is never much fun, but maintaining good payment habits can go a long way for your credit.
Remember: Try your best not to miss a payment, avoid carrying a balance to save on interest, and either automate your payments or keep track of when they’re due.