Discover cards are currently not available on CNBC Select and links have been redirected to our credit card marketplace where you can review offers from other issuers like American Express or Chase. You can also check out our list of best credit cards for alternative options.
While it's commonly known that there are consequences to paying your credit card bill late, you might wonder what happens if you pay it early. Aside from potentially protecting yourself from late fees and high interest charges, paying your credit card early can indirectly affect your credit.
Below, CNBC Select looks at whether it's good to pay your credit card bill early and how doing so might affect your overall financial health.
What we'll cover
Compare popular savings accounts
Benefits of paying your credit card bill early
Paying your credit card early can help you keep your credit usage down and avoid any extra fees.
Lower credit utilization rate
One of the most noticeable benefits of paying your credit card bill early is that you can lower your overall credit utilization rate, also known as your debt-to-credit ratio. John Ulzheimer, formerly of FICO and Equifax, previously told CNBC Select that while the optimal credit utilization rate is 1%, "less than 10% is much more doable and it will serve your scores well."
If you make payments to your card before the payment due date, you can lower your overall credit utilization rate, which is a positive sign for credit lenders. Credit utilization is one of the factors that determines an overall credit score, so keeping a low credit utilization ratio could improve your score.
Avoid late payment fees
Paying your credit card bill early is a simple way to avoid late payment fees. Aside from the fee, missed credit card payments may be reported to the credit bureaus, meaning your credit score and APR could also be affected.
Credit card late payment fees can be as high as $41 for each missed payment. However, there are a few cards, such as the Citi Simplicity® Card, which have no late fees whatsoever, and some cards, like the Discover it® Cash Back, which may waive your first late fee.
The Citi Simplicity® Card may not earn rewards, but it can still save you money due to its amazing intro-APR offers.
Information about the Discover cards has been collected independently by CNBC Select and has not been reviewed or provided by the issuer of the card prior to publication.
Time to resolve payment issues
Many credit cardholders pay their bills by linking their credit card to a bank account and transferring the money that way. By paying your credit card bill early, if there are ever any issues with the payment process, such as bank transfer issues or insufficient funds, you have time to correct them before any payments are officially due. If you wait until the day the payment is due, you might not have any wiggle room should you run into unforeseen issues.
Save money on interest
The golden rule of credit cards is to pay your balance in full when possible to avoid expensive interest charges, also known as a credit card deadbeat. If you only pay the minimum balance required on a credit card, you will be charged interest on the remaining balance and new purchases you make.
However, paying your bill in full isn't always feasible. If you have to carry debt into the next month, you don't need to wait until the next billing cycle ends to pay the balance. Most credit card issuers charge interest daily based on your annual percentage rate (APR), so the earlier you pay the balance, the less you'll pay in interest.
For those who are carrying a balance from month to month, consider a 0% APR card to help you save on interest fees. The Wells Fargo Reflect® Card has no annual fee and offers a 0% intro APR for 21 months from account opening on purchases and qualifying balance transfers (then 17.49%, 23.99%, or 28.24% variable APR thereafter;). Balance transfers made within 120 days from account opening qualify for the introductory rate, BT fee of 5%, min $5.
The Wells Fargo Reflect® Card can help you save on interest charges thanks to its extra generous intro-APR offer on purchases and qualifying balance transfers.
Highlights
Highlights shown here are provided by the issuer and have not been reviewed by CNBC Select's editorial staff.
- Apply Now to take advantage of this offer and learn more about product features, terms and conditions.
- 0% intro APR for 21 months from account opening on purchases and qualifying balance transfers. 17.49%, 23.99%, or 28.24% variable APR thereafter; balance transfers made within 120 days qualify for the intro rate, BT fee of 5%, min: $5.
- $0 annual fee.
- Up to $600 of cell phone protection against damage or theft. Subject to a $25 deductible.
- Through My Wells Fargo Deals, you can get access to personalized deals from a variety of merchants. It's an easy way to earn cash back as an account credit when you shop, dine, or enjoy an experience simply by using an eligible Wells Fargo credit card.
Balance transfer fee
5%, min: $5
Foreign transaction fee
3%
Don't miss: The best 0% APR credit cards so you can finance your debt or make purchases interest-free
Better budgeting awareness
Paying your credit card bill early allows you to track your spending better and make adjustments as needed. If you pay your bill halfway through the month and notice you've been spending too much dining out, you can spend the second half of the month trying to cut back.
Budgeting apps like You Need a Budget (YNAB) can also help you keep track of your finances. For example, YNAB uses the zero-based budgeting method where users allocate every dollar into a category.
You Need a Budget (YNAB)
Cost
34-day free trial then $109 per year ($9.08 per month) or $14.99 per month (college students who provide proof of enrollment get 12 months free)
Standout features
Instead of using traditional budgeting buckets, users allocate every dollar they earn to something (known as the "zero-based budgeting system" where no dollar is unaccounted for). Every dollar is assigned a "job," whether it's to go toward bills, savings, investments, etc.
Categorizes your expenses
No
Links to accounts
Yes, bank and credit cards
Availability
Offered in both the App Store (for iOS) and on Google Play (for Android)
Security features
Encrypted data, accredited data centers, third-party audits and more
Terms apply.
Downsides of paying your credit card bill early
While paying your credit card bill early isn't inherently bad, there are a few potential drawbacks.
Low credit utilization
You don't want your credit utilization ratio to drop too low; 10% utilization is recommended as it shows lenders and credit card issuers that you actively use your card. If you continuously pay your card early and keep your score too low, you might prevent a positive boost to your credit score. After all, a 0% credit utilization rate suggests that you aren't making any purchases on your card, which isn't as good as using it responsibly in the eyes of credit card companies.
Less available cash
If you're paying your credit card bill early, you still need to ensure you have enough cash in your checking accounts to cover your other expenses. Paying early means you will have less cash available to you at any given time, and that extra cash could be making you money.
Instead of paying your bill early every single time, consider putting your extra cash into a high-yield savings account like UFB Portfolio Savings. With no minimum balance and no monthly fees, this account can help provide some interest on funds that otherwise would have been used to pay off your bills prematurely.
Does paying my credit card early affect my credit score?
Paying your credit card early does not directly affect your credit score, but can still positively influence it. You lower your credit utilization when you pay your bill early, which can help your credit score.
Similarly, paying your bill early can mean you're not taking full advantage of certain situations. If you carry no balance on your card, a credit utilization score of 0% is less influential than one in the single digits.
Compare credit repair options
When should I pay my credit card?
It's important to pay your credit card statement by the due date. While you can make payments earlier, there's no real benefit to paying your credit card bill weeks in advance unless you're managing credit utilization. You won't get hit with late payment fees or interest if you pay your full statement balance on the card by the due date.
If you prefer to use auto-pay, setting it up so that your payments are sent a few days before the due date should usually suffice, plus gives you a window to fix any potential hiccups. For those who pay manually, set yourself reminders so you don't miss your payment due date.
FAQs
When is the best time to pay your credit card bill?
Making your payment by the billing due date each month should suffice for most people, but there could be some benefit for paying it earlier to manage your credit utilization.
Will my credit score go down if I pay early?
Paying your credit card bill early won't negatively impact your credit score. Depending on your specific circumstances, having a credit utilization score of 0% could hold you back from achieving maximum points as credit card companies won't see that you're using the card.
How can you boost your credit score quickly?
There are several ways you can boost your credit score quickly, from paying off any revolving debt you might have to reviewing your credit report for errors.
When should I pay my credit card bill to avoid interest?
As long as you pay off your credit card's statement balance in full by the due date you will not be charged any interest fees.
Can I pay my credit card twice before the due date?
Yes, you can pay off your card balance in multiple payments before the due date which can help you keep your credit utilization down. Just make sure you don't pay more than you owe.
Money matters — so make the most of it. Get expert tips, strategies, news and everything else you need to maximize your money, right to your inbox. Sign up here.
Why trust CNBC Select?
At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every credit card article is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of credit card products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.
Catch up on CNBC Select's in-depth coverage of credit cards, banking and money, and follow us on TikTok, Facebook, Instagram and Twitter to stay up to date.
Read more
For rates and fees of the Discover it® Cash Back, click here.
