Should You Pay Off Your Credit Card Weekly?

If you’re in the habit of paying off your credit card early and on a weekly basis, you might be wondering whether this is the right move. We will provide you with everything you need to know about paying off your credit card on a weekly basis?

Should You Pay Off Your Credit Card Weekly?

If you have the money, you should pay off your credit card weekly as it reduces the amount of interest you pay on the balance, prevents you from reaching your credit limit, and lowers your credit utilization rate, which can improve your credit score. Your credit card utilization refers to how much of your available credit you’re using. The lower this number, the better your credit score will be. This is so because your credit utilization (how much of your available credit you’re using) accounts for 30% of your credit score. The lower your credit utilization, the better your credit score will be. So, paying off your credit card weekly reduces your credit utilization, improving your credit score.

Benefits of Paying Off Your Credit Card Balance Weekly

Let’s discuss some of the benefits associated with paying off your credit card on a weekly basis:

1. Improve Credit Score Through Lower Credit Utilization

Again, paying off your credit card early on a weekly basis can improve your credit score. This is so because credit scoring models such as FICO and Vantage Score reward those with lower account balances with a higher credit score. As a rule of thumb, you should always strive to keep your account balances below 10% of your available credit limit and to never exceed 30% utilization. If you exceed 30% utilization, your credit score will be negatively impacted.

2. Reduction in the Amount of Interest Owed

Paying your credit card early on a weekly basis not only reduces your account balance, improving your credit score, but it also reduces the amount of interest you’ll have to pay on your credit card balance. This is so because if you’re carrying a credit balance, your card issuer is probably charging you interest on your average daily balance. So, paying off your balance early reduces the amount of interest you’re paying, saving you money.

For example, if you’re carrying a $2,500 balance, making three payments of $300 four times a month will reduce the amount of interest that you owe more than would making a single payment of $1,200 at the end of the month. This is so because interest accrues or is calculated based on the daily average balance. So, making multiple weekly payments will reduce the amount of interest that you owe on your credit card.

3. Saving Money On Late Fees

By making your credit card payments on a weekly or bi-weekly basis, you ensure that you are not going to be charged late fees for failing to make the minimum payment on your credit card. Always making your payments on time ensures that your credit card will have a positive impact on your credit score. This is so because your payment history accounts for 35% of your credit score. So, always making timely payments will improve your credit score.

4. Paying Down Balance Faster

Making weekly payments can be a great way to force yourself to pay down your credit card balance faster. This is so because getting into the habit of allocating money to pay off your credit card weekly encourages you to pay down your balances faster. Repeatedly seeing your balance decrease is a great motivator for you to allocate more funds to pay down your credit card weekly.

5. Make Room For More Charges

Paying down your credit card on a weekly basis adds room for you to make purchases that matter. For example, if you have a low credit limit, and you have expenses that exceed your credit limit, paying down your balance on a weekly basis to make more credit available is a good idea. Just make sure that you do not leave too high of a balance at the end of your closing period to avoid a point drop due to high credit utilization.

6. Monitoring Your Budget

Paying you credit card on a weekly basis puts you in the habit of monitoring your spending and prevents you from being surprised when your credit card statement arrives. If you don’t like the idea of paying your card on a weekly or bi-weekly basis, you should still often login into your online bank and check your spending to avoid a hefty minimum payment at the end of the month.

When It Doesn’t Make Sense to Pay Off Your Credit Card Weekly

If you usually pay off your credit card in full at the end of every month, you’re probably not keeping a balance on your credit card. If you are not keeping a balance on your credit card, this means that you’re not paying interest, and therefore you may not have a good reason for making weekly or multiple credit card payments per month. This is so because credit card issuers provide an interest free grace period, which lasts until your next due date date. So, you’re not saving money on interest.

Nevertheless, if you want to make weekly card payments to avoid getting into your debt and to stay on top of your spending, there is nothing wrong with doing. So, if you’re someone who uses credit cards as merely a payment tool and not a debt tool, this is great because you’re benefiting from the rewards that your credit card has to offer without racking up debt and losing money on interest fees.

Is It Bad to Pay Off Your Credit Card Weekly?

Paying off your credit card weekly is good for people who keep a balance on their credit card as it reduces the amount of interest they end up paying. Also, it lowers credit utilization, which has a positive impact on their credit score. So, there is nothing wrong with paying off a credit card on a weekly basis.

Is it Better To Pay Off Your Credit Card Weekly or Monthly?

If the balance on your credit card at the end of the month would be close to your spending limit, it makes sense to pay it off weekly in order to avoid a high credit utilization on your credit card. As a rule of thumb, you should keep your credit utilization below 10% and never exceed 30% credit utilization. If you exceed 30% utilization, your credit score will drop as a result.

What Happens If You Pay Off Your Credit Card a Week Early?

If you pay off your credit card a week early, you may reduce the amount of interest owed on the balance and reduce your credit utilization. Only positive things will happen when paying off a credit card early as there is no penalty for making early payments.

Can You Make Multiple Payments On Your Credit Card?

You can definitely make multiple payments on your credit card. In fact, if you’re nearing your credit card’s limit, you should reduce the balance before the close of your statement.