A Better Way to Pay Your Credit Card
First, a few questions:
Do you know your credit card’s closing date?
Do you know your card’s minimum payment due?
Have you heard about the “grace period” for your credit card payments?
If you answered “no” to any of the above questions, this story’s for you. (Even if you answered “yes,” it’s a good refresher.) And if you do have debt to pay down, or are looking to improve your credit score, we have helpful tips for you, too.
First, there are several different dates and numbers you should keep in mind when it comes to managing those little pieces of plastic in your wallet. We’ll tell you what you need to pay attention to:
1. Know Your Billing Period
Each month, a new billing period will start on your credit card, but not typically on the first on the month. Let’s say your credit card has a billing period that begins on the 25th of one month and ends the 24th day of the next month. Any transactions that post during this 25th-to-24th timeframe will be reflected on your bill for that month.
2. Understand Your Closing Date
Your credit card statement closing date wraps up your bill for that month—any transaction posted after the closing date will go on your next statement. Your card’s closing date can be located on your monthly statement.
Let’s take the same example above of the card with a billing period of the 25th to the 24th. The closing date for that card is the 24th day of the month—the last day of the billing cycle. The balance on the card as of that date is the one that’s reported to the credit bureaus and reflected in your credit reports.
Your credit card utilization rate is also reported at this time. We’ll talk more about that in a minute.
3. Don’t Forget Your Payment Due Date
Most credit card issuers will send you reminders to pay your bill so you won’t miss your payment due date. You can also use LearnVest’s Money Center or Credit Karma’s account monitoring to set up reminders. If you miss a credit card payment or make a late payment, it can damage your credit score and cost you in interest charges.