The use of credit cards is a necessity if you want to establish a strong credit rating. Lenders want to see that you can use different types of credit responsibly, and the only way to show that is to use certain credit accounts, like loans and credit cards, and let them report to credit bureaus. credit every month.
And when you use your credit cards to build credit – or for any other reason – you’ll end up getting an invoice in your email or mailbox for your charges. But how exactly do you pay this bill? Does it require you to send a check in the mail? Can you pay by phone with your bank details? Or, if you’re strapped for cash, can you use another credit card to cover the costs?
If you’re wondering how the process works, here’s what you need to know about how to pay a credit card bill.
How to pay your credit card bill
Paying your credit card bill on time is extremely important, but in most cases it’s also extremely easy. It just takes a few simple steps that you can follow to get the job done.
1. Pay attention to the due date
One of the first things you should do after receiving your credit card bill is to check the due date. You have to make your payment on time, every time, or you might get a nasty surprise.
Late payment by credit card can have a number of negative effects, including impacting your credit score. Paying your card late repeatedly can also cause your credit card issuer to penalize you with a higher APR or closing your account.
So, as soon as you receive your invoice, be sure to pay attention to its due date. You will need to send your payment to your credit card company before this date. Depending on the payment method you choose, you might need more time to do this.
2. Decide how much you want to pay
Start by deciding how much you want to pay. You have several options here, including:
- The minimum payment. This is the minimum amount you must pay to stay in good standing with your credit card company. Your minimum payment is usually only a fraction of your total balance. If you don’t make the minimum payment, you will likely be charged late fees, an APR penalty, or both. And if you make your minimum payment more than 30 days after it is due, you may also end up with an overdue payment showing on your credit report.
- The balance of the statement. When you pay your statement balance, you “pay in full”. This means that you pay the full amount of charges made during your previous billing cycle, plus any outstanding balances you owed from previous billing cycles.
- The current balance. When you pay off the current balance, you pay the full amount you owe for the charges that wiped out your account. This means that any charges that have not been paid to your account during this billing cycle will be due in the next billing cycle.
- A personalized amount. Your card issuer may also allow you to pay a custom amount, which is exactly what it sounds like. This is the amount you choose to pay into the account.
The amount you choose to pay depends on what works best for your credit card reimbursement plans. If you can afford to pay the entire statement balance, this is often the best way to pay your credit card bill because it removes all interest charges from the equation.
On the other hand, if you can only afford to pay the minimum amount and you don’t use a card with an introductory 0% APR, you will have to pay the credit card interest that accumulates. on the balance.
3. Choose a payment method
Before attempting to make a payment to your credit card, it is also important to understand the payment options available to you for settling your bill. Each card issuer typically offers at least a few different payment options, which can include:
- An ACH transfer from your bank account
- Online bill payment through website or app through your bank account
- In-person cash payments at an authorized financial institution, such as a bank or credit union
- A check sent to the card issuer
- A money transfer that is hardwired to your credit card issuer
- Payment by phone via your checking or savings account
Any or all of these options may be available from your card issuer. Which method you choose to use depends on your preferences and when your bill is due. Some methods, such as sending a check, take much longer than paying your bill online.
With that said, there is one thing you cannot do when paying off your credit card, and that is use another credit card to pay your bill. Credit card issuers don’t allow this because it puts you at increased risk of having a lot of credit card debt – and it puts you at higher risk of total default. You will therefore need to make sure you have enough money in your bank account to cover your bill.
4. Make the payment on or before the due date
If you plan to send a check for your credit card bill, you will need to make sure you send it as soon as possible. Postal mail is notoriously unreliable, and it may take a few extra days for the check to be processed and the money to be applied to your account. That’s part of why your due date is so important.
If you want to use online bill payment through the website or credit card app, you will have a lot more flexibility as to when you need to make your payment. These payments have virtually no lag and, unlike paper checks, they can be made on the day they are due without any penalty, as long as they are made before the cut-off time.
The time frames within which you need to work for other types of payments, like in-person cash payments or money transfers, all depend on your issuer. Make sure you know the cut-off times to make your payments on time, otherwise you could end up with late fees or an APR penalty.
5. Configure automatic payment for future payments
If you are comfortable using the credit card issuer’s website or app to pay your bill, you may also want to consider setting up automatic payment. By setting up automatic payments, you won’t have to worry about juggling due dates or ending up with late fees if you miss one. Your payments will be automatically deducted from your checking account each month on the day of your choice.
In some cases, your online credit card account also gives you access to other payment features, such as due date changes or multiple automatic monthly payments. For example, you can move the due date on your credit card bill to fall on your payday, or you can change your payment settings to make multiple payments to your card each month.
These features can come in handy when juggling other bills and accounts, and will help make sure you don’t miss an important payment deadline.