Why making two credit card payments a month could boost your score and help you save

Technically, you only have to pay your credit card once a month, by the assigned due date, to remain on time and in good standing with payments. But if you are trying to stay on top of your credit card balance, making two payments a month — one mid-month and another ahead of your actual due date — could be a useful hack.

Sure, it will require some extra legwork. But the benefits are twofold: Saving you in interest charges, and possibly boosting your credit score by lowering your credit utilization ratio. There is even the possibility that the trick will help you pay down your debt faster, if it puts you in better touch with your budget.

What are the benefits of making two credit card payments a month?

There are a few ways making two payments a month can be beneficial.

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It could save you on interest charges. Credit card interest “compounds daily based on your average daily balance,” said GOBankingRates. If you carry a balance, “by making two payments per month instead of one, you keep your average daily balance lower and reduce the amount of interest that accrues.”

It may boost your credit score. One determining factor of your credit score is your credit utilization ratio, which is how much of your total available credit limit you are currently using. More frequent payments can increase the odds your balance stays below the recommended 30% ratio.

It can expedite debt payoff. As mentioned, more frequent payments could cut down on interest charges, which in turn could make it easier to pay off the balance you already have. More frequent payments may also lead to you paying a bit more than you would have otherwise.

When is it worth trying to make two payments?

The reality for most people is that “credit card bills are just one of the several expenses they pay each month,” and even if “you’re paying your card more frequently, you still need to cover your other costs,” said CNBC Select. Some people will find it hard to budget for more frequent payments, especially if their income is irregular. And by “parting with your money sooner rather than later, you’re missing any potential gains it could have earned you” in a high-yield bank account.

Meanwhile, those in the habit of paying their credit card in full each month “are unlikely to see a significant benefit” from this hack, since they already are not paying interest charges, said SoFi. There could, however, be an exception if you have a “low credit limit relative to your overall monthly spending,” as in this scenario, “making a payment mid-month may have a bigger impact on your credit utilization ratio and, therefore, your credit score.”

How should you time twice-monthy credit card payments?

The easiest way to pull off making payments twice a month is to time them strategically, lining them up with your paychecks, especially if you get paid bimonthly. Ideally, you would make “one payment shortly after receiving your paycheck and another before your credit card statement closes,” said CBS News.

Just make sure to stay aware of your actual due date. “Making an early payment doesn’t necessarily eliminate your obligation to satisfy the minimum payment by the due date,” said CBS News, and you could otherwise face late fees. Also make sure to keep close track of how much you are paying each time and when those payments hit.