It’s no secret that credit card issuers have become much more flexible with customers’ billing due dates in recent years. These days, when you receive a new card, you’ll likely be asked to select a day of the month that works for you. If not, making this change is usually as easy as putting in a quick call to your issuer.
But you might be wondering: Why would someone want to change a credit card billing due date? Here are three good reasons:
1. It doesn’t coincide with your pay dates
Putting most of your expenses on your credit card to earn maximum rewards is a smart idea, but probably results in a pretty big bill by the time the month is up – a bill that requires a significant chunk of your paycheck to cover. If you’re habitually paying late because you’re waiting for a paycheck to roll in, consider moving your bill’s due date so that it better aligns with your pay schedule.
Remember, paying your credit card bill by its due date is extremely important to maintaining a good credit score. In fact, 35% of your FICO score is determined by your history with making on-time bill payments, so it’s crucial to make this a priority.
2. It comes too close to the date your issuer reports to the bureaus
Admit it: You’re a little confused about this one. We don’t blame you – it definitely requires some explanation. But understanding the nuance here could do wonders for your credit score, so be sure to read carefully.
Every month, your credit card issuer sends a report of your current balance to the 3 major credit bureaus. This information is used to calculate your credit utilization ratio, which is the amount you owe on your credit card compared with your credit limit. If your credit utilization ratio exceeds 30%, your credit score could take a tumble because it heavily influences the portion of your score determined by amounts owed.
People who pay off their credit card balance in full every month often think that they don’t have to worry about credit utilization ratio, because their balance will always be reported as $0. But this is incorrect – your issuer doesn’t wait until after you’ve paid your bill to send in your account information to the bureaus. The report is sent on a specific day every month, and if that day comes at a time when your balance is running high, this is the figure that goes onto your credit report.
You probably see where this is going: Find out from your issuer which day they report to the bureaus, then try to change your billing due date so that it falls about a week or so before that. This way, you’ll have just made a payment when your balance is reported, and your utilization will look low every month.
To be on the safe side, it’s still a good idea to keep your balance below 30% of your available credit at all times. You never know when your issuer might change the day it reports, and you wouldn’t want to get dinged one month because your timing is off. But this little trick could cause your credit score to go up quite a bit, so it’s definitely something to consider.
3. It comes at the same time as lots of other big bills
Unlike other bills, like your rent or your student loan payment, you don’t have to pay your credit card bill in full. But to avoid costly interest charges, you definitely should. Unfortunately, though, some people opt to push off paying their credit card bills in favor of others when they’re running low on cash.
If your credit card bill is due around the same time as your other big bills, it might be worthwhile to consider changing it. This way, the temptation to make a partial payment on your card is somewhat decreased because you’ll have more funds available.
Credit card bill due date image via Shutterstock.