What You Need to Know Before You Pay Your Credit Card Early

older-man-looking-at-bills

You thought you were being responsible by making the minimum payment on your credit card a month early, so you're surprised — and peeved, let's be frank — when a late fee appears on the following month's statement.

This can happen when you send a payment in before a statement's closing date and the amount you pay gets applied to the current month's statement instead of the following month's.

To show you how this could happen, let's say you typically have a minimum payment of $25 and your card's statement closes on the 29th of December. You pay your minimum on December 5th. Then around the 20th, you decide to pay a little extra on your card, which you think will cover your minimum payment in January. On the December 27th, your account is credited for that extra payment, but since your statement closes two days later, the extra payment will be credited to December's billing cycle, not January's. Come December 30th, you'll have a minimum payment due for January, and if you go through the month blissfully thinking you're all set with that extra payment you made in December, you're going to be shocked when you get your February statement and spot a late fee...and maybe even a higher interest rate!

There are some easy solutions to ensure this doesn't happen to you. Look on your statement for the closing date and make sure that you mail your "early payment" close to that date so it hits your account during the following billing cycle. You can also schedule your following month's payment using Bill Pay through Hanscom FCU's Online Access HD.

Of course, if you want to pay the full balance of your card off, you can do so at any time...just make sure if you've been carrying a balance that you get that payment in before your closing date to avoid a late fee. 

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 Others are reading:

What to Do When You're in a Credit Crisis
The 3 Things You Must Do with Your Student Loans

About Author

Diana Burrell
Diana Burrell

Diana Burrell is the communications manager at Hanscom FCU and edits the MoneyWisdom blog. She has a background in magazine journalism, as well as marketing, advertising, and public relations, and has written over a dozen books. You can reach her at dburrell@hfcu.org.

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