How To Pay A Credit Card Bill

When it comes to building a solid financial foundation, staying on top of your credit card payments ranks right up there with building an emergency fund and setting up a 401(k).

After all, managing your credit card debt can help you build your credit score, which means lower interest rates and more favorable terms on your loans. An essential part of that is making your monthly payments on time.

If you're new to the world of using a credit card, you might be unfamiliar with how credit card payments work. But it’s important to know how to pay a credit card bill so you can maintain a good score.

Best Ways To Pay Your Credit Card Bill

Credit card bills can be paid several ways, including hassle-free automatic payments, over the phone, online via an app or the card issuer’s website, and through the mail.

Telephone

You can make a payment via phone by calling the customer service number listed on your credit card. Typically, you can make an immediate payment or schedule a payment through the credit card issuer's automated phone options.

Automated Clearing House (ACH) Withdrawal

An ACH withdrawal is an electronic bank transfer that's typically free of charge. When you opt to pay your credit card bill via ACH, the money is pulled directly from your linked bank account. It usually takes 1 to 3 days to process an ACH withdrawal.

Online Bill Pay

Online bill pay is a type of ACH debit and is a convenient way for you to pay your bills. You can set up automatic payment, which can help you make timely monthly payments and avoid late fees.

Mobile App

Most credit card issuers let you make a credit card payment through the card's mobile app. Within the app, you can schedule autopay or make a same-day payment.

ATM

You can make a credit card payment using an ATM of the credit card issuer. To do so, you insert your card, select "make a payment" on the ATM screen and insert your cash payment.

When Should I Pay My Credit Card Bill?

It’s best to pay your credit card bill by the due date. And you'll want to prioritize paying your bill on time as payment history takes up 35% of your credit score. If you fall behind on payments, your credit score will likely take a dip.

If you're having trouble making on-time credit card payments, consider reaching out to the card issuer and explaining your financial situation. They might temporarily lower your minimum payment. Also, some cards give you the option of changing your payment due date if there’s one that better fits your pay day schedule.

Should I Carry A Balance On My Credit Card?

If you can manage it, you should pay your credit card balance in full each payment cycle. That's because credit cards come with high interest rates. Those charges can create a debt cycle that can be hard to get out of. On top of that, the more you owe on the card, the higher your utilization ratio – another factor impacting your credit score.

Credit card billing cycles have a period from the statement date to your next payment due date in which interest isn’t charged. It's common for credit card issuers to have 30-day billing cycles. Pay your balance by the due date, and you won't owe any interest. Otherwise, expect to pay quite a bit in interest fees.

For instance, let's say you are carrying a $5,000 debt across your credit cards. If your average interest rate is 22% and you make a monthly payment of $100, it'll take you about 5 years to pay off the balance. The interest owed? A cool $3,678.

Another thing to keep in mind is credit utilization. The lower your credit utilization, the better you look in the eyes of lenders, and the better your credit score. If you keep a balance on your card, your credit usage will be higher. In turn, it can negatively impact your credit.

But if you need to carry a balance, make it a top priority to make at least the minimum payment, which will protect your credit.

6 Tips To Successfully Manage Credit Card Payments

Now, we'll go over some simple steps you can take to stay on top of your credit card payments. The key is to stay consistent and make it a priority to manage your cards.

1. Pay On Time

Your payment history makes up a lion's share of your credit score — 30%, to be exact. Making on-time payments is one of the most important things you can do to keep your score in tip-top shape. Whether it's setting up automatic payments, calendar reminders or divvying up your payments, make it a priority to make at least the minimum payments on or before the due date.

2. Set Up Automatic Payments

To help you make on-time payments, set up autopay. This can usually be done online or through your credit card's mobile app. You can schedule autopayments for the full balance, minimum payment, or an otherwise specified amount.

3. Pay More Than Once Per Month

As we talked about, you can make more than one payment per month. This will help make your credit card payments more manageable. Plus, it can bump down your credit usage.

4. Always Make At Least The Minimum Payment

As mentioned, staying on top of your payments is the best thing you can do to keep your credit in tip-top shape. At the very least, make the minimum payment. If you're having a hard time, consider reaching out to the credit card company, and seeing if they're willing to temporarily lower the minimum payment or pause payments for the time being.

5. Select Your Payment Due Date

You can also see about moving your payment date so it's more in line with your cash flow. For instance, maybe your payment date is near the end of the month, which clashes with your rent. If so, see if you can move the date to another part of the month. That way, you'll have more funds available to make your card payment.

6. Know Where You Stand

Getting your head around exactly how much credit card debt you're carrying, the APR, due dates and other fees and terms can help you better manage your cards. In turn, you can better gauge which payment methods are best for you, and come up with a credit card debt payment plan.

The Bottom Line: Knowing How To Pay Your Credit Card Bill Can Help You Maintain Good Credit

The benefits of making credit card payments in full and on time can help you build a strong credit score and, in turn, help you gain better terms and rates on loans and lines of credit. To help you improve your financial literacy,  download the Rocket Money^SM app, which features a swath of resources.