Making multiple credit card payments

Quick insights

• If doing so doesn't create financial hardships for you in other areas, paying your credit card bill in multiple early payments is typically not a bad idea.
• If one or more partial payments occur prior to the end of your billing cycle, it could improve your credit score.
• Multiple payments could also be a smart budgeting strategy that aligns your credit card payments with your own paychecks.

It's generally recommended to pay off your entire credit card balance in full every month, on or before your payment due date, whenever possible. There are many advantages to doing so, including building a strong credit score and credit history, avoiding costly fees and interest charges, improving your chances of approval for future loans and more. But is there an advantage to breaking your credit card bill into multiple smaller payments instead of one larger one?

Benefits of making multiple credit card payments

There are possibly some benefits of making multiple credit card payments. Under certain circumstances it can improve your credit score and overall financial wellness to pay your credit card bill off in smaller amounts as long as those payments add up to the full statement balance by the time that balance is due. And if you are dealing with a credit card balance that you're carrying month to month, multiple payments can be a useful way to reduce the total interest paid.

Here are some potential benefits of making multiple credit card payments:

• Keeping a low credit utilization ratio: Credit utilization ratio refers to the percentage of your available credit currently occupied by debt. If credit card payments are made prior to your statement close date, they can lower your credit utilization ratio. Keeping your credit utilization ratio under 30% could result in long-term improvements to your credit score.
• Budgeting: It can help with budgeting to break large charges up into multiple smaller payments. Whether you align your payments to your pay checks, submit payments at the same time every week, etc., breaking payments into portions can provide the accountability or easy organization you need to help stick to a budget.
• Reduced interest payments: If you do carry a balance from one month to another, paying it off in multiple installments can lower the total amount of interest you'll be charged, since you'll be paying down your balance.
• More available credit: Each payment you make frees up a corresponding amount of available credit, which can be useful when planning for the future.

Drawbacks of making multiple credit card payments

As long as you can afford to do so, there are few drawbacks to paying off your credit card balance in multiple payments prior to the due date. But it can make it even more necessary to keep a clear budget to ensure nothing falls through the cracks and is forgotten. Multiple payments could make it confusing to tell how much of your statement balance remains to be paid, especially if you are not enrolled in automatic payments for your remaining balance.

It's not necessarily a drawback, but it's worth pointing out that any payments made after your statement close date – whether made in a single lump sum or broken into a smaller amount – might not impact your credit utilization ratio in the short term. In order to lower that, and potentially see a corresponding improvement in your credit score, those payments should be made prior to your statement close date. Payments made after your statement close date would only be reflected in the next month's credit utilization ratio.

Tips for making multiple payments

Here are a few additional tips for making multiple payments:

• Pay day alignment: You might want to consider aligning your credit card payment dates with when you receive your paychecks.
• Be aware of your credit utilization ratio: As previously mentioned, making payments before your statement close date could reduce your credit utilization ratio.
• Stay organized: Keep track of your payments relative to your monthly balance and due date to ensure you don't miss a payment.

Instances when making multiple payments makes sense

There are some situations when multiple payments make more sense than others.

• Credit score: If you're looking to improve your credit score, lowering your credit utilization ratio is one of the best ways to do so. Credit utilization ratio accounts for 20-30% of your credit score, so any early payments that can lower your credit utilization ratio have the potential to help your credit score as well.
• Interest: Similar to the long-term interest savings associated with twice-monthly mortgage payments, paying off your outstanding credit card debt two or more times per month instead of only once can reduce the total amount owed in interest. It is of course preferable to avoid interest payments entirely by paying off your balance in full every month.
• Budgeting: When making and sticking to a budget, it can be helpful to allocate funds toward expenses more frequently.
• Motivation: If your outstanding debt is overwhelming, multiple small payments toward paying it down could help motivate you to continue working toward your financial goals – especially if even that single monthly payment is difficult or seems overwhelming.
• Planning for a large purchase: If you know you're going to be making a large purchase soon, it could make sense to pay at least a portion of your outstanding balance early to ensure enough of your credit limit is left to account for the large purchase.

Other strategies to manage credit card debt

Multiple credit card payments can be a useful tool for managing your debt, but there are many other options that might be beneficial for you.

• Debt reduction strategies: Spending a little time researching debt reduction options can be helpful when creating a new budget. Here are a few debt-payoff strategies:
  • Debt avalanche method: The debt avalanche method is a strategy for paying down debt. After you pay the minimum on each card, you should put your remaining resources toward paying off the card with the highest interest rate first, then so on. This strategy is most helpful for reducing the total interest paid.
  • Debt snowball method: The debt snowball method is the opposite of the avalanche method. After you pay the minimum on each card, you should put your remaining resources toward paying off the card with the smallest balance first, then so on. This strategy is most helpful for getting started and staying motivated, as it is the quickest way to see an entire balance removed.
  • Debt consolidation: This method involves using a low or 0% introductory APR balance transfer credit card to consolidate your debt in one place. You can then work to pay off as much of the balance as possible before the introductory APR offer ends. This strategy is most useful if you think you will be able to pay off the entirety or majority of your debt within the introductory APR window.
• Free online tools: Your bank might have online resources to help you with budgeting, credit score monitoring and more. Free tools like Chase Credit Journey^® and Budget Planner can help you keep track of your finances and plan for the future.
• Negotiate: If you're struggling with credit card debt, consider talking to your creditors to see if you're eligible for a negotiated settlement or hardship program.

Bottom line

Whether you're looking to pay down existing debt or working ahead to lower your credit utilization ratio and improve your credit score, making small, frequent payments before your due date could be a worthwhile strategy for you.