Credit cards are convenient, flexible, and universally accepted financial tools.
They can help you manage your cash flow, providing you with access to credit whenever you need it.
And, of course, they can earn you rewards, such as gift cards and free trips, through lucrative loyalty programs.
But despite their benefits, credit cards can be a source of trouble if not used wisely.
If you rack up a slew of purchases and fail to make timely payments, you can quickly find yourself drowning in debt.
For these reasons, the most critical rule of credit card management is making all your payments on time.
Ways To Pay Your Credit Card Bill
There are several ways to pay your credit card bill.
Depending on which payment method you choose, your payment may get processed slowly or quickly.
1. Online Banking / Mobile App
Paying your credit card bill using your card issuer’s online services is easy and convenient.
You log in to your account using your computer or mobile app and initiate a transfer from your chequing or savings account to your credit card.
It usually only takes a few clicks to complete the transaction.
Suppose you make the payment on a regular business day.
In that case, it will be credited to your account the same day, meaning your card issuer will acknowledge it.
If your bank account and credit card are linked to the same card issuer, this process is instantaneous.
You could see your payment posted the same day, meaning it will be reflected in your available credit limit.
You can verify this by checking your credit card statement following the transaction.
Suppose you hold a chequing account with Royal Bank but have a credit card issued by Scotiabank.
In that case, you’ll have to add Scotiabank as a payee in your Royal Bank online banking or mobile app to pay your card balance.
Under this scenario, the payment will be credited to your account the same day but posted within 1 – 3 business days rather than immediately.
You should aim to pay your credit card by the due date at the latest – this will ensure you avoid interest charges.
If you pay by the due date, your payment is considered on time regardless of when it gets posted to your account.
2. In person
If you’re distrustful of online banking, you have the option of paying your credit card in person at a branch.
A customer service representative will process your payment using your debit card.
In some cases, they may also accept cash, but be sure to inquire about your financial institutions’ policy regarding this payment method to be sure.
As with an online payment, your payment will be credited to your account the same day you conduct it.
3. By mail with a cheque
Mailing a cheque is the slowest way to pay your credit card balance.
Your cheque must first arrive at your card issuer’s payment processing center, which can take several days.
Then, an employee must open the envelope, physically deposit the cheque, and post the payment to your account.
Payments received through mail can take 5 – 7 business days to process, so be sure to consider this factor if you opt to mail a cheque.
Understanding the Credit Card Payment Cycle
The billing cycle refers to the length of time between billing periods.
Credit card billing cycles cover one month, so they range from 28 – 31 days.
Each cycle comes with a credit card bill.
Your card issuer will send you a statement at the end of each billing cycle, which outlines your total transactions and the amount owing.
There are a few items you need to be aware of when looking at your statement.
The statement closing date refers to the date the statement was printed, and the payment due date is the date your minimum payment is due.
The minimum payment is the smallest amount your card issuer requires you to contribute against your outstanding balance to consider it paid on time.
The period between the statement date and the payment due date is known as the grace period.
The grace period typically spans 21 – 25 days, and during this time, no interest accrues.
If you pay your balance in full during the grace period, you can avoid all interest charges.
If you only pay a portion of the balance within this period, interest will accumulate on the remaining amount.
Frequently Asked Questions
- Is it better to pay your credit card in full?
Yes. The primary reason it’s ideal to pay off your entire credit card balance is to avoid interest charges. Also, consistently paying off your balance leads to a lower credit utilization ratio, contributing to a healthy credit score.
- Is it bad to pay your credit card bill early?
It depends. By paying your credit card bill early, you can free up additional credit much earlier. Payments aren’t posted to your account until 1 – 3 business days after you make them. As such, if you’re anticipating a significant expenditure during that tight time frame, it’s wise to initiate payment before the due date.
If your cash flow is tight, holding off on payment until the due date is preferable. By paying off your balance too early, you could find yourself low on cash.