2 WAYS TO MANAGE CREDIT CARD PAYMENTS
Posted on: Jul. 18, 2017 in Debt, Credit, Credit Score

You’ve heard that in order to maintain a good credit score, you should never miss a credit card payment. This is an essential first step and having a system to avoid late payments is a must. But did you know that there are more things you can do with just that card payment that will help boost your score? We’ve got two more things you can do to reduce debt and raise your credit score.

Each month, your credit card will tell you the minimum amount due at that time. If you’re strapped for cash and cannot pay more, by all means, make that minimum payment. If you’re able to pay anything over that minimum, do it. For every day that you have outstanding debt on your card, you’re accruing interest, and the interest rate you’re charged is higher than anything you’d make by hanging on to your money. You’ll pay far more in the long run by hanging on to debt any longer than you should.

Back in the day, you’d have to wait for your statement in the mail, write a check and mail it back to the credit card company by the due date. This certainly made making extra payments a hassle. These days, it’s simple to visit the website of your lender and with just a few clicks, a payment can be electronically transferred from your bank account. There’s no longer any reason to wait and pay once per month if you have the money earlier. Some cards have restrictions on how many payments you can send per month, so check to make sure you won’t hit a limit before you pay the minimum in any particular month.

Because most credit cards calculate your interest on your average daily balance, they are looking at your balance daily. Any day that you can bring that balance down, you should. Waiting, even if it’s just another day, will cost you. Now, the difference between today or tomorrow probably won’t matter, especially if you’re making a smaller payment on a larger debt, but every little bit helps and it builds a good habit.

Also, because your credit score is partially based on your utilization ratio (how much debt you have compared to your credit limit), the less debt you have the better. Since you’ll never know when your lender will be reporting this information to the credit bureau, any day you can lower the amount, the better.

Of course, if paying more on your cards leaves you so broke you have to use your card again to stay afloat, this may not be the best approach. Keeping current on your bills and reducing the amount you put on the card should always be the first order of business.

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