The average person knows to make a minimum payment toward their credit card bill by their monthly due date. For most people, that’s more than enough! At the same time, a lot of perks come with paying off your bill earlier than necessary. 

Here are three benefits of proactive credit card bill payments, plus some tips to make them possible.

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Benefit #1: Earlier bill payments can boost your credit score

One influential factor that affects your credit score is your credit utilization ratio. This is the amount of money you owe as a percentage of your total credit limit. 

Let’s say you have only one credit card with a total limit of $10,000, and you owe a total of $1,500. In this case, your credit utilization ratio is 15%. Generally, the lower that percentage is, the better. A utilization ratio above 30% could start to damage your credit score. 

This is where the timing of your credit card bill payments comes in. For example, your credit card company reports your account info to the credit bureaus at a specific time every month — you can usually find that reporting date on your bill. Here’s why making earlier bill payments is worthwhile: 

1. Let’s say you make a payment toward your bill after the monthly reporting date. The credit card company will report a balance that doesn’t match the amount you actually owe after your payment — and that can hurt your utilization rate and overall credit score. 

2. Let’s say that you make a payment toward your bill ASAP whenever your utilization rate starts to hover around 30%. By paying early (instead of on the monthly due date), you can make sure the credit card company reports an accurate balance that helps (not hurts) your score. 

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Benefit #2: Paying early can help you pay less interest

When it’s time to pay your credit card bill, paying off your balance in full every month is always best. This helps make sure you only spend realistically within your means, and also helps you save on the interest they charge you. 

At the same time, if you can’t pay off the full balance, making your bill payment early can still reduce your interest cost. This is because the monthly interest you’re charged is based on your average daily balance. 

Plus, if you’re struggling to pay off your monthly statement balance in full because the due date is inconvenient, you can call your credit card company to move the monthly due date. The company will usually do it without any issues, and it’s worth a few minutes on the phone to pick a due date that works best for your budget and schedule! 

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Benefit #3: Proactive payments help you steer clear of fees

At the very least, make sure you pay the minimum amount due on your credit card bill by the monthly due date. Otherwise, you could get slapped with late fees or other fines. As of 2022, late fees can run up to $40 depending on the credit card issuer’s policies and whether it’s the first time you’ve been late on a payment. You can also set up an automatic payment plan to ensure you steer clear of all late fees! 

Start by paying the minimum amount due on your credit card bill every month. After that, there are steps you can take to boost your credit score — above and beyond just making basic payments! Paying before your credit reporting date and paying off your full balance can both go a long way. 

If you’re struggling to get started or need more support, don’t be afraid to reach out to a trusted friend, family member, or financial advisor. If you want free expert advice on starting from scratch, check out Kasheesh’s Finance Academy!