Paying your credit card early is pointless because interest accrues daily anyway. The last point is not true! That was just one of several false notions surrounding early credit card payments. Making early credit card payments can be very beneficial to your finances. Let’s debunk seven common myths about early credit card payments.
7 Early Credit Card Payment Myths to Debunk
Credit cards are both a convenient tool and a source of puzzlement for many unsavvy cardholders. One particular area of misconception revolves around the timing of credit card payments. It’s common to hear various myths and beliefs about early credit card payments on your credit card monthly statement balances. Throughout this exploration, we will debunk these myths individually to clarify how early payments can impact your finances and credit score.
Table of Contents
Myth: Paying the minimum on time is sufficient for my credit score.
Paying the minimum on time helps to avoid incurring credit card late fees. However, more is needed to make a major positive impact on your credit score. In contrast, paying the full statement balance or more than the minimum can have a more significant positive effect. Doing so can help with two things. Firstly, it can help you avoid unwanted interest by quickly paying off debt. Secondly, it complements your credit utilization ratio by showing a healthy balance between your credit card debt and credit limit.
Myth: Paying too early doesn't help my credit score.
Paying your credit card statement too early will not negatively impact your credit score. On the contrary, it may boost your credit and show your responsible payment behavior. Paying your credit card bill early, even before the statement cycle closes, can still positively affect your credit score by reducing your credit utilization ratio.
Myth: Paying early means I'll miss out on rewards.
We can see why this may be a common myth. However, most credit card issuers, like the ones below, calculate rewards based on your total spending within a statement period. In other words, even if you make a credit card payment during an open billing cycle, you will continue to earn rewards for purchases made in the same billing cycle after an early payment. You may get away with redeeming rewards sooner too.
Synchrony Plus World Mastercard®
Synchrony Plus World Mastercard®
Synchrony Plus World Mastercard®
- 16.74% to 23.74% variable based on creditworthiness and the Prime Rate Regular Purchase APR
- 16.74% to 23.74% variable based on creditworthiness and the Prime Rate Balance Transfer APR
- 29.99% Cash Advance APR
At a Glance
The Synchrony Plus World Mastercard® offers unli8mited 1% cash back on all purchases plus a simple redemption process, and more with a $0 annual fee.
- Best Benefits
- Rates & Fees
- Why Should You Apply?
- No annual fee
- Earn unlimited 1% cash back rewards on every purchase
- Contactless payment compatibility
- Regular Purchase APR: 16.74% to 23.74% variable based on creditworthiness and the Prime Rate
- Balance Transfer APR: 16.74% to 23.74% variable based on creditworthiness and the Prime Rate
- Balance Transfer Transaction Fee: Either $5 or 3% of the amount of each transfer, whichever is greater
- Cash Advance APR: 29.99%
- Cash Advance Transaction Fee: Either $10 or 5% of the amount of each cash advance, whichever is greater
- Foreign Transaction Fee: 3% of the transaction amount in U.S. dollars
- Late Payment Penalty Fee: Up to $41
- Return Payment Penalty Fee: $39
- You have good or excellent credit
- You prefer basic cash back rewards as a statement credit instead of other rewards
- You don’t want to pay an annual fee
Upgrade Cash Rewards Visa®
Upgrade Cash Rewards Visa®
Upgrade Cash Rewards Visa®
- 14.99%-29.99% variable based on creditworthiness and the Prime Rate Regular Purchase APR
- 14.99% to 29.99% Balance Transfer APR
At a Glance
The Upgrade Cash Rewards Visa® offers no fees, low rates, cash back, and credit lines from $500 to $25,000 in one unique package. The card provides consumers the flexibility and predictability to quickly pay down balances and get debt-free. The Upgrade credit card is one of the lowest regular APR credit cards on the market for those with excellent credit scores, putting it firmly on any list of the best balance transfer credit card deals – or any list of the best credit cards in the U.S.
- Best Benefits
- Rates & Fees
- Why Should You Apply?
- $200 bonus after opening a Rewards Checking Plus account and making 3 debit card transactions*
- Earn 1.5% unlimited cash back on card purchases every time you make a payment
- Combine the flexibility of a credit card with the predictability of a personal loan
- No annual fee
- No touch payments with contactless technology built in
- See if you qualify in minutes without hurting your credit score
- Great for large purchases with predictable payments you can budget for
- Mobile app to access your account anytime, anywhere
- Enjoy peace of mind with $0 Fraud liability
- *To qualify for the welcome bonus, you must open and fund a new Rewards Checking account and make 3 qualifying debit card transactions from your Rewards Checking account within 60 days of the date the Upgrade Card account is opened. To qualify, debit card transactions must have settled and exclude ATM transactions. Please refer to the applicable Upgrade VISA® Debit Card Agreement and Disclosures for more information. Your Upgrade Card and Rewards Checking account must be open and in good standing to receive a bonus. If you have previously opened a Rewards Checking account or do not open one as part of this application process, you are not eligible for this welcome bonus offer. Welcome bonus offers cannot be combined, substituted, or applied retroactively. The bonus will be applied to your Rewards Checking account as a one-time payout credit within 60 days after the 3rd qualifying card purchase.
- Regular Purchase APR: 14.99%-29.99% variable based on creditworthiness and the Prime Rate
- Balance Transfer APR: 14.99% to 29.99%
- Balance Transfer Transaction Fee: Up to 5%
- Foreign Transaction Fee: Up to 3%
- You struggle to pay off your credit card balances
- You want a structured repayment plan
- You can reliably pay off your statement balances to earn cash back for your purchases
- You have a desire to get debt-free quickly
- You hate penalty or other hidden fees
Bilt Mastercard
Bilt Mastercard
Bilt Mastercard
- 21.49%, 24.49%, or 29.49% variable based on creditworthiness and the Prime Rate Regular Purchase APR
- 21.49%, 24.49%, or 29.49% variable based on creditworthiness and the Prime Rate Balance Transfer APR
- 29.24% variable based on the Prime Rate Cash Advance APR
At a Glance
The Bilt World Elite Mastercard is a unique rewards credit card from Wells Fargo that lets users earn 1X on monthly rent payments, 3X on travel, 2X on dining, and offers impressive perks including Lyft and DoorDash statement credits – all for no annual fee.
- Best Benefits
- Rates & Fees
- Why Should You Apply?
- No annual fee
- No foreign transaction fees
- Earn 1X points on rent payments (up to 50,000 points each calendar year)
- Earn 2X points on travel
- Earn 3X points on dining
- Regular Purchase APR: 21.49%, 24.49%, or 29.49% variable based on creditworthiness and the Prime Rate
- Balance Transfer APR: 21.49%, 24.49%, or 29.49% variable based on creditworthiness and the Prime Rate
- Balance Transfer Transaction Fee: Introductory fee of either $5 or 3% of the amount of each balance transfer, whichever is greater, for 120 days from account opening. After that, up to 5% for each balance transfer, with a minimum of $5
- Cash Advance APR: 29.24% variable based on the Prime Rate
- Cash Advance Transaction Fee: Either $10 or 5% of the amount of each advance, whichever is greater
- Late Payment Penalty Fee: Up to $40
- You rent and want to earn rewards on your monthly rental payments
- You're a member of Bilt Rewards
- You don’t want to pay an annual fee
Myth: It's best to carry a small balance on your credit card.
Carrying a balance from month to month doesn’t improve your credit score. It can lead to unnecessary interest charges. Paying your balance in full is the financially responsible thing to do and can help positively impact your credit score. Use the BestCards.com credit card payoff calculator for any existing credit card debt you want to dissolve strategically and calculate how long it will take to finish paying off your debt. If you worry more about your credit card account staying active to avoid closure, early credit card payments may not be the first thought in your mind. In such a case it’s best to charge a monthly recurring bill and pay the statement balance in full each cycle.Â
Myth: You should only make one payment per month.
Luckily, there’s no limit to the number of payments you can make on your credit card within a billing cycle. Making multiple payments, including paying early credit card payments, can help manage your balance and reduce interest charges. It’s comparable to a Buy Now, Pay Later (BNPL) service, except you are aware of the interest rate upfront and can customize your weekly payments at your convenience. It helps to create a monthly budget worksheet before you get ahead of yourself and start making multiple credit card payments in one billing cycle. Create a budget to see how much excess income you have to chip away at credit card debt.Â
Myth: Paying early confuses credit reporting agencies.
In reality, credit reporting agencies are sophisticated entities, proficient at handling the diverse payment habits of consumers. Whether you pay your credit card balance early, on time, or just before the due date, the important factor is the consistency of on-time payments. As long as you’re meeting your financial obligations punctually, credit reporting agencies are more interested in your reliability and responsibility as a borrower. So, rest assured that early credit card payments won’t lead to any confusion at the credit bureaus, but it can positively reflect your commitment to managing your financial affairs responsibly.
Myth: Paying early Is pointless since interest accrues daily.
While it’s true that interest on credit card balances often accrues daily, paying early can reduce the average daily balance and, consequently, the amount of interest charged. While it’s accurate that credit card issuers calculate interest daily, making early credit card payments can be a strategic move to minimize the impact of those daily interest charges. By reducing your outstanding balance sooner, you effectively lower the average daily balance on which interest is calculated. This means that, in the long run, you’ll end up paying less interest, ultimately saving money and potentially paying off your debt more quickly. So, paying early isn’t pointless; it’s a savvy financial choice that can help you cut down on the cost of carrying a credit card balance.
Bottom Line
To sum up, your early credit card payments should do you no harm. Not only does it show your responsible payment behavior to lenders but it also may help increase your credit score. Additionally, save on unwanted interest fees by lowering your monthly statement balance to pay less over time over time. Continue using your credit cards responsibly, and make the extra payment if you can manage as it can promote a healthier credit score and less financial stress.
Related Article: 7 Common Myths About Authorized Users
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