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I will preface with I have a very bad sense about these sorts of things. When is it a good idea to pay off a credit card balance before the end of a cycle?

For example a statement period is Apr 13 to May 12, 2021 and the minimum payment is due by June 9th. Say I check the balance on April 30 and see its $1500. I always have the money before purchasing something with a credit card. Would it be a good or bad thing to pay the $1500 on April 30? Would it count towards whatever the minimum payment would be at the end of the cycle? In other words could I not have to pay a minimum amount on June 9th if I paid enough on April 30th?

I heard a potential downside is if the money could have been in my savings account it would have been making me interest if I hadn't paid the credit card so soon. Is this valid reasoning?

titchseason
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  • This is very likely going to be a duplicate. (But I don't have the time to find the link right now.) But the answer is if you pay early it will apply to your next statement (so no payment will be due). And interest on savings for a week or two is negligible for low amounts and low interest rates. – TTT Aug 01 '21 at 21:56
  • Stop caring whether you earned 5 cents less interest than you could have in any given month. You'll be happier in the long run. – chepner Aug 01 '21 at 22:07
  • Does this answer your question? Assuming you already have the money, how to tell when/which day of the month to pay off credit card balance? – shoover Aug 01 '21 at 23:31
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    More than that, the duplicate is the same OP. – JTP - Apologise to Monica Aug 02 '21 at 01:19
  • From the credit card's perspective, it doesn't matter. Make at least the minimum payment by the due date shown, stay below your credit limit, and you will never have any issues. From your perspective, do everything in your power to avoid paying interest, ever. Pay it in full by the due date, period. As far as I know there is no penalty for paying multiple times before a due date; the CC company wants their money, period. However you wish to space this out is based on your budgeting skills and due date comfort levels. – MonkeyZeus Aug 02 '21 at 19:04
  • The easiest, safest and most efficient way: sign up for autopay. The CC company will pull the money shortly before the due date, which avoids penalty, interest, hassle and maximize your cash flow. – Hilmar Aug 02 '21 at 19:56
  • @JTP-ApologisetoMonica I thought of making this a comment to the previous question. My main question here was, if you pay mid cycle does that count towards the amount due at the end of the cycle? – titchseason Aug 12 '21 at 18:15
  • If I owe $2000 mid cycle and pay it, the statement will reflect what I charged since. If that is not what you were asking, please clarify and I can clean up our comments. – JTP - Apologise to Monica Aug 12 '21 at 18:25
  • @JTP-ApologisetoMonica for example I check the balance mid cycle and see I owe $2000 and pay it off. I then spend $500 more before the cycle ends. Does that mean I already made the minimum payment, or no because the $500 was added? Thing is I have no clue how minimum payment is actually calculated. – titchseason Aug 12 '21 at 18:29
  • No! Any payments made before the closing date reduce the statement balance, but the minimum payment is based on that number, and nothing else. If one were concerned about missing a payment, the key is to autopay an amount greater than the minimum could be, and choose a day that’s definitely after the bill is cut, but before it would run late. – JTP - Apologise to Monica Aug 12 '21 at 18:37
  • @JTP-ApologisetoMonica ok so just to be clear the minimum payment is based on the balance only at the end of the cycle? And if the balance isn't $0 then there's going to be a minimum payment that isn't $0? – titchseason Aug 12 '21 at 18:44
  • Yes, typically if the balance due is less than some amount, say, $25, that would be the minimum payment. I believe you got this right now. – JTP - Apologise to Monica Aug 12 '21 at 18:52
  • @JTP-ApologisetoMonica at this point what's the best way to proceed regarding the state of this question? I don't want to delete the question as I find your explanation useful. – titchseason Aug 21 '21 at 00:10
  • The question remains in this state, closed questions are only deleted only in specific situations, not simply because they were closed as duplicate. – JTP - Apologise to Monica Aug 21 '21 at 00:38

1 Answers1

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Would it be a good or bad thing to pay the $1500 on April 30?

I think it's a Very Good Thing, because you would be paying for April's purchases with April's money. That makes budgeting very easy.

As an example: I pay my CC bill on the last day of the month, as well as every Sunday evening (today being an exception because it's so early in the new month).

Would it count towards whatever the minimum payment would be at the end of the cycle?

Yes.

In other words could I not have to pay a minimum amount on June 9th if I paid enough on April 30th?

Correct.

Bottom line: June 9th is not the only day you can pay your bill; it's just the last day to pay your bill without incurring interest charges.

I heard a potential downside is if the money could have been in my savings account it would have been making me interest if I hadn't paid the credit card so soon. Is this valid reasoning?

It's technically correct, but the interest rates on savings accounts are so low that it's not materially relevant. IMNSHO, the convenience of paying at EOM greatly outweighs those few earned pennies.

RonJohn
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