Play it right and you get ease, convenience and rewards. Lose and you’re stuck with fees, penalty rates and debt.
From understanding exactly when a card payment is technically late to using bill syncing to your advantage, here’s your cheat sheet to winning the credit card billing game:
1. Don’t carry a balance. Period.
One of the best ways to win the credit card game: Pay balances in full every month.
The average card APR hovers just above 16 percent. But no balance means no interest.
And if you can rack up rewards, points or cash back while paying nothing for the privilege, that’s a winning card hand.
2. Know each card’s limit.
One myth is that consumer need to carry a balance to build their credit score. Not true.
Using too much of your credit each month can torpedo your scores. “A lot of consumers think it’s good to max out their credit line,” says Besharat. “But that can backfire.”
That’s because credit scoring formulas assess how much of your credit line you use each month, known as credit utilization. The less you use, the better it is for your score.
If you’re not paying off balances in full every month, you have options, including asking your card issuer to grant you a larger credit limit.
3. Don’t let cards charge over-limit fees.
One way to win the credit card billing game is by skipping fees. And there’s one you never have to pay: the “over-limit” fee.
The Credit CARD Act of 2009 banished these fees unless consumers agree to them in advance. It also mandates that fees can’t be larger than the amount by which you exceed your credit limit. (So, going $1 over your credit limit can’t cost you more than $1.)
Many card issuers no longer charge over-limit fees. Those that do offer the option of letting transactions go through when you hit your limit in exchange for a fee, $39 on average.
Pro tip: Even if you’ve agreed to pay over-limit fees, you can reverse the decision. How you revoke permission will vary with the issuer and the card – and it won’t erase fees that have already been levied. Contact your credit card issuer to learn more about the process to revoke your election.
4. View cards as a convenience, not a loan.
One big card blunder: Using plastic as a short-term loan instead of a handy payment device. Two costly examples: cash advances and charging items you can’t currently pay for in cash.
With cash advances, the APR averages nearly 8 percent higher than the average purchase APR, according to CreditCards.com’s 2017 cash advance survey. And that doesn’t even include the 5 percent cash-advance fee that many issuers charge.
Depending on the card issuer, that cash advance could also cost you in another way. Some issuers see cash advances “as a symptom of financial instability,” says Besharat. As a result, your card issuer could cut your credit line or raise your interest rate.
5. Understand due dates and processing times.
“Many consumers have the misconception that their payment is received when it’s postmarked,” says Melissa Dornan, vice president of strategic partnerships for Guidewell Financial Solutions, a nonprofit credit counseling service.
“For credit card companies, a payment is received when it’s cashed,” she says.
Paying online? Electronic doesn’t mean instantaneous. Talk with bill-pay provider to find out how many days to allow for delivery. And when you’re calculating delivery times for e-payments, weekends and holidays don’t count.
6. Sync card bills.
Your payment due date has to be on the same date every month. You might be able to decide exactly what day of the month you’d like that to be, says Russell Graves, board member with Financial Counseling Association of America.
If you can, schedule due dates to coincide with a paycheck that doesn’t have to cover a mortgage or car note. Or, if your income allows it, set all card bills for the same day, says Besharat. With only one billing date to remember, you reduce your chances of forgetting a bill and incurring expensive late fees or penalty rates.
Video: Credit card payment due dates explained
7. Know what is (and isn’t) considered late.
A few days late with that card bill? It could be expensive, but it won’t immediately hurt your credit.
Card issuers can’t report a “late payment” to the credit bureaus unless it’s at least 30 days past due. “If you are only a few days late, you may need to pay a late fee, but it won’t hurt your credit report,” says Chi Chi Wu, staff attorney for the National Consumer Law Center.
But late payments still come at a cost. If you’re even a day late, card issuers can assess late payment fees. The 2017 maximum late fees, set by the CARD Act, are $27 for the first offense and $38 after that. The issuer could also slap penalty rates on balances that average nearly 30 percent.
8. Hit back at penalty rates
If you’re assessed penalty rates or fees, ask to have them waived – especially if you have good credit, says Dornan.
A 2017 CreditCards.com poll found that, of those cardholders who asked, 87 percent received a late payment fee waiver and 69 percent got a lower interest rate. Dornan, however, admits these penalties might be harder to fight if the issuer raised the rate because a consumer was late.
“I think when it comes to waiving late fees, it’s done on a case-by-case basis,” she says. And too many consumers don’t ask because they think it’s a done deal, or they’re ashamed they missed the deadline.
If that doesn’t work, mark your calendar. Once you’ve made six consecutive on-time payments, the card issuer is supposed to review your records to consider restoring your normal rate. And you can thank the Credit CARD Act for that.
9. Use multiple monthly payments to cut interest.
Paying off a big balance? Consider using a tool that homeowners have used for years to pay down mortgages more quickly: multiple monthly payments.
Since card interest accrues daily, paying twice a month – and wiping out part of that balance earlier – means you’re saving on interest, says Dornan.
Her advice: Call the card issuer, tell them what you want to do, and make sure your issuer can support multiple payments.
A little bit of diligence and research can turn your card payment strategy into a winning game, resulting in lower interest rates, fewer fees – and more money in your wallet at the end of each month.