When Should I Pay a Bill?

Many people do not worry about paying their bills on time. But this can have a significantly adverse impact on financial health. Paying your bills on time is the foundation for maintaining stable financial health.

The main question, however, is when should you be paying your bills? When is it considered too late, and when is it considered too early? Ideally, you should be paying not too early nor too late. This article will explain the correct time frame for making your payments, among other essential topics.

Why You Should Consider Paying Your Bills Early

You may not like paying your bills too early, but there are certain benefits in doing so, especially when you’re clearing credit card bills.

To understand this, let’s explore how credit works. The main factor determining your financial credibility among banks and credit unions is your credit score. This is greatly influenced by something called a “credit utilization ratio.”

This is the ratio of how much you owe to how much credit you have left. So if you owe $4,000 and your total credit is $10,000, you have $6,000 left in your credit account. So your credit utilization ratio is 40%. Ideally, the smaller the ratio, the better your credit score will be. By making payments early, you decrease the credit utilization ratio reported by your bank to the credit union.

Another reason you should pay your bills early is to reduce the interest rate. It’s worth noting that the interest you’re charged is dependent on the average daily balance in your account.

Why the Due Date Is Important

If you’re paying credit card bills regularly, you must understand the importance of the due date. This is the date by which you’re required to pay what is owed, if not the total amount, the minimum payment. If you do not, expect to pay higher interest rates on the amount you owe.

Missing the due date also impacts your credit score. Payments that are not made within 30 days of being billed will be reported to the credit union. This will knock off points from your credit score.

8 Tips for Avoiding Late Payments

If you always find yourself paying your bills late, there are a few measures you can take to improve in this regard. In the below section, we list eight tips for avoiding late payments.

Use Autopay

The best way to avoid late payments is to use the Autopay function. All banks have this feature available to their users. When you activate Autopay, the banking system will deduct the amount from your account on a set date. This is usually a few days before the actual due date. This way, you’re never late on your bills. You can leave everything on autopilot. Just ensure you have a sufficient balance in your account every month to make the payments.

Consolidate Bills

If you’re enjoying multiple services from a single provider, then you can check to see if you can consolidate the bills into one. For example, you might be paying phone, TV, and internet bills to a single business. Instead of paying three different bills, you can arrange a single payment to cover all services. This way, you can eliminate an accidental missed payment for a particular service.

Note Payment Due Dates in a Calendar

A calendar is your best friend when it comes to knowing when something is needed to be done. You should maintain a calendar where you note down when bills are due. Make a habit of updating and reviewing the calendar every day. This way, you’ll never miss a payment date.

Stay Organized

People make the mistake of keeping their bills in their pocket, inside a book, or inside of their jacket. But if you never see it again, you’ll never know that a payment is due. It’s only when the bank charges you a late fee amount that you realize a payment has been missed. To avoid this issue, you must stay organized. Keep all of your bills in one place. It’s helpful to get e-bills issued to your email instead. This way, you have all the bills in one place. At the end of the month, you can review them and make payments accordingly.

Know Your Billing Cycle

The billing cycle is the time frame between when your last statement was issued and when your upcoming statement will be issued. This is usually between 30 and 50 days.

If you make recurring payments for a service, you must know your billing cycle. The more payments you have to make, the more billing cycles you have to take care of.

Pay Bills From Your Smartphone

With a smartphone, you can make payments from anywhere in the world. So it’s essential to set up payment methods on your phone. Usually, you’d have to install an app or e-wallet. Then you can start making the payments from your mobile.

So even if you’re not in a bank or in front of your PC, you’ll never miss a payment.

Review Your Bank Statement Every Month

Your bank statement contains all the transactions for a month. By reviewing this document, you’ll know when you made a purchase and when you’re expected to make the payments if you used credit. A bank statement will also reveal any charges you might be paying that you’re not aware of.

Ask a Third Person to Monitor Your Payments

Finally, you can have your friend, fiancé, sibling, or parent monitor your payments. You can hand over the bills and ask them to see if you’re paying all of them on time. If not, they must inform you. This way, you have someone continually pushing you to clear your payments on time.

Conclusion

You must pay bills on time, and by doing it consistently, you make yourself eligible for exclusive offers that your bank might have for financially responsible customers. So you’re essentially benefiting your future self by clearing your bills on time.

Frank Gogol

I’m a firm believer that information is the key to financial freedom. On the Stilt Blog, I write about the complex topics — like finance, immigration, and technology — to help immigrants make the most of their lives in the U.S. Our content and brand have been featured in Forbes, TechCrunch, VentureBeat, and more.

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