If you’ve been paying your bills on the due date, you may want to reconsider your spending strategy. Dana Marineau, Credit Karma’s vice president and financial advocate, explains why you should pay bills “the earlier, the better” and how it can affect your credit score.
The best time to pay bills
Does it matter if you pay a week before vs. a day before the due date? Nope—it just depends on your lifestyle, Marineau says. “There’s no right or wrong way,” she explains. “The key is to figure out your spending and saving habits, and find the date that works best for you.” For instance, one solution Marineau often recommends is paying all your bills at once after one of your paydays and then using your other paycheck for saving or spending. Here’s why you should pay all of your bills on the same day.
Why you should pay bills early
Besides avoiding late fees and reducing stress, paying your bills ahead of schedule can have a positive impact on your credit score. “Payment history information typically accounts for nearly 35 percent of your credit score, making it one of the single most important factors in calculating your score,” Marineau explains. “Just one late payment can drastically lower your credit score.” That can have a domino effect over time, depending on factors like whether you carry a balance and how many times you miss a payment deadline.
How to manage bill payments
While you can track your target payment dates on a calendar and manually pay your bills, auto-pay is a more convenient alternative. “As long as your monthly expenses are consistently less than your income, automatic bill pay could work for you,” Marineau says. However, she warns that “it isn’t a license to totally check out on your finances. It’s just supposed to help you guard against missed payments and cut down on your worry and time spent on your finances.” That means you’ll still have to monitor your account balances regularly. Want to save more on your bills? Check out these 11 tips and tricks for cutting costs on every type of household bill.