Paying your credit card bill on the due date seems like the responsible thing to do. But according to financial expert John Liang, that habit could be quietly dragging down your credit score.
The issue comes down to when credit card companies report your balance to the credit bureaus. If you wait until the due date to pay, your balance may already be on record as high — and that can “crash your credit score,” Liang said.
Here’s what you need to know about the best and worst days to pay your bill, and how to protect your credit utilization.
The Due Date Problem
Many people assume the due date is the right day to pay. It’s printed on every statement, and paying on time avoids late fees. But Liang, speaking in a video on the topic, said that’s actually the worst day to pay.
The reason is credit utilization — the percentage of your credit limit you’re using at any given time. Credit scoring models generally want to see that number under 30%. When it climbs higher, your score can take a hit.
The key detail is the difference between your statement closing date and your due date. The closing date is when your credit card company reports your balance to the credit bureaus. The due date is when your payment is actually required.
Those dates are not the same.
A $5,000 Example
Liang walked through a concrete example in the video. Imagine a credit card statement that begins on January 1st and closes on Jan. 31. Whatever you spend during that month is due on the due date.
“And your due date typically isn’t another 24 or 25 days later,” he said. “So Jan. 1 to Jan. 31, you spend, spend, spend, spend, spend. And let’s say you spent $5,000 of a $10,000 credit limit.”
On Jan. 31, the statement closes. That’s the day your credit card company reports your balance to the credit bureaus. At that moment, you owe nothing yet — the bill isn’t due for weeks. But the bureaus don’t know that.
“And so on Jan. 31, you have used $5,000 of a $10,000 credit limit, even though you don’t owe the bank a penny until the due date, which is 20+ days later,” Liang explained.
To the credit bureaus, you look like someone using half their available credit. That’s a utilization ratio of 50% — well above the recommended 30% threshold.
The Early Payment Fix
The solution is simple: pay most of your balance before the closing date.
Liang suggested making a payment a few days before the statement closes. In the January example, that would mean paying on Jan. 27 or Jan. 28.
“So, from Jan. 1 to Jan. 31, I would actually go ahead and make a payment on Jan. 27, or Jan. 28, so that my utilization is now going to be maybe 5% or 10%, which is then going to be able to boost my credit score,” Liang said.
“Then on the due date I pay the rest off,” Liang said. “There is no penalty whatsoever for early payment.”
Keep a Small Balance
One important caveat: don’t pay the balance down to zero before the closing date. Liang advised keeping a little on the card so it shows you’re still using it.
“Be sure to keep a little on your card so it shows you’re still using it, though,” he noted. “Then, pay the small percentage off on the due date.”
The reasoning is that consistent credit usage helps build a positive credit history. A small balance demonstrates that you’re actively using credit responsibly.
A General Payment Schedule
To illustrate the timing, here’s a general outline of how Liang’s approach works:
| Step | Action |
|---|---|
| Month begins | Statement period starts |
| Mid-month | Make a large payment before the closing date |
| Closing date | Statement closes; balance reported to bureaus |
| Due date | Pay remaining small balance |
The result: the credit bureaus see a low utilization ratio, and you still pay your full balance on time.
Why Credit Utilization Matters
Credit utilization is a factor in your credit score. It measures how much of your available credit you’re actually using. Liang’s advice focuses on keeping that number low to protect your score.
The widely cited guideline is to keep utilization under 30%. Liang’s approach goes further — he recommends aiming for 5% to 10%.
The Closing Date vs. Due Date
The confusion between closing dates and due dates is common. Here’s the distinction:
- Closing date: The last day of your billing cycle. This is when your statement is generated and when your card issuer reports your balance to the credit bureaus.
- Due date: The day your payment must be received to avoid late fees. This is typically 20 to 25 days after the closing date.
Your statement shows both dates. If you only pay attention to the due date, you’re missing the date that actually matters for your credit score — the closing date.
What About Autopay?
Many people use autopay to make sure they never miss a payment. That’s a good safety net, but it can work against you if the payment is scheduled for the due date.
If your autopay is set to pay the full balance on the due date, your balance will be reported to the credit bureaus at the closing date — before your payment goes through. That means your reported utilization could be high every single month.
One option is to set up two payments per month: one a few days before the closing date and one on the due date. This mimics Liang’s recommended approach without requiring you to remember to log in and pay manually.
Another option is to change your autopay date to a few days before the closing date. As long as the payment is received before the due date, you won’t face late fees. And your balance will be lower when the bureaus check.
The Bottom Line
Paying your credit card bill is necessary, but when you pay matters almost as much as whether you pay. Waiting until the due date can leave a high balance on your credit report, dragging down your score.
The fix is straightforward: make a large payment a few days before your statement closes, then pay the remaining small balance on the due date. This keeps your reported utilization low while still ensuring you pay on time.
There’s no penalty for early payment, and the benefit to your credit score can be significant. It’s a small change to your routine that could make a real difference over time.
If you’re trying to build credit or maintain a high score, check your statement for both dates — the closing date and the due date. Then plan your payments accordingly. Your credit score will thank you.
Source: finance.yahoo.com
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