Why you should move your credit card due date

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By Kevin Cash

Many credit-card issuers allow cardholders to move their bill’s monthly due date how they please — a benefit that can mean avoiding missed payments and saving on interest while better aligning a large monthly bill with your schedule.

Finding out if your issuer actually allows you to move the date is as easy as calling customer service and asking. Here are some of the potential perks that come with it:

More time to pay

If your due date falls on a day of the month right before you get paid, for example, you may be in a difficult position to pull together enough funds to cover the balance and avoid paying interest. For those on a tight budget, customizing a due date may even help avoid missing the minimum payment. In either situation, moving your due date will save you money.

As a side note, in a case where you’re certain you’ll miss a payment, calling your issuer to explain the situation may result in a deadline extension and ultimately mitigate the risk of additional fees. Most issuers will be sympathetic if you’re up front and have a good reason for missing a payment.

Grouping bills together

Making your credit card due date the same as the due date for other bills is a good way to help prevent a missed payment. While most people probably use a credit card to pay their bills, there are certain things that usually stand alone such as mortgage payments, rent, student loans, amongst others. Having all or most of your bills fall on one day allows you to set aside one block of time to cover all of your payments, which ultimately means no late fees or added interest.

On the other hand, if you’re confident that you’ll always have a large enough bank account balance to cover it, you should consider automated payments for at least the minimum amount due. Doing so covers you from late fees and penalty APRs.

Reducing credit utilization ratio

In the event you’re going to apply for a large line of credit like a mortgage or auto loan, lenders will consult your credit reports to, in part, look at your credit-utilization ratio. Paying your balance — or a large portion of it — before submitting an application will reduce your credit utilization ratio and can increase the probability of loan approval.

The math behind a credit utilization ratio is relatively simple: issuers divide your credit in use by the amount of credit that’s available to you. They factor this for both total credit in use and credit in use on individual cards. (Simply making sure there are no relatively large balances on any individual cards is a safe bet for lowering your utilization ratio.)

No, paying your bill before its regular due date doesn’t actually require moving the date. But for those who prefer to constantly have a low credit-utilization ratio — to improve their credit score, perhaps — setting a due date to earlier in the month can assist in the process.

About the Author

Kevin Cash is a Self contributor and former staff writer for NerdWallet, where he covered topics on credit and credit cards.

Written on December 2, 2016

Self is a venture-backed startup that helps people build credit and savings.
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Disclaimer: Self is not providing financial advice. The content presented does not reflect the view of the Issuing Banks and is presented for general education and informational purposes only. Please consult with a qualified professional for financial advice.

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