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UpdatedMay 02, 2023   |  4-min read
Written byJeff Gitlen, CEPF®
An increasing number of people who are tired of their finances being controlled bytheir credit card balancesare picking up on a new practice – making multiple credit card payments per month. They are finding that by simply making two or more minimum payments to their credit card, their entire financial picture can change for the better. Here’s what you can expect if you take up the practice of making multiple credit card payments each month:
No More Late Payments
It may be stating the obvious, but if you diligently make multiple payments each month, you shouldn’t be late again which means fewer late fees. You will also avoid incurring anylate payments on your credit reportwhich will keep your credit score healthy.
Pay Down Your Debt Faster
Using the same principle for paying down your mortgage more quickly, the same can be accomplished with your credit card debt.
With a mortgage, you can split your monthly payment in two and pay it every two weeks. That results in 26 half payments, which is equivalent to 13 monthly payments. That one extra payment each year reduces the time it takes to pay off a 30-year mortgage by seven years. You can accomplish the same thing by dividing your monthly credit card payment in two and paying it every two weeks.
The faster you pay down your debt, the less you pay in monthly finance charges. How much could you save? Check out ourDebt Payoff Calculatorto find out!
Makes It Easier to Pay More Than the Minimum Payment
By making multiple credit card payments, it becomes easier to budget for larger payments. If you simply split your minimum payment in two and pay it twice a month, it won’t have a big impact on your balance. But if you make the minimum payment twice a month, you will pay down your debt much more quickly. Making multiple payments, especially if they are coordinated around your paychecks, can help you smooth out your cash flow and make it easier to increase your total monthly payment amount.
No More Interest Charges
When you do pay down your credit card debt you won’t have any more finance charges. Making multiple payments each month on your current balance ensures you won’t have a month-ending balance that will incur a finance charge.
Improve Your Credit Score
While making multiple payments each month won’t affect your credit score (it will only show up as one payment per month), you will be able to better manage your credit utilization ratio. Usually when you make a credit card payment on the due date, say on the 15thof the month, the credit card companies wait until the end of the month to report your activity. By then, you could have racked up additional credit card balances, which increase your credit utilization. That helps to improve your credit score.
Keeps You on Track With Your Budget
If you use yourcredit cardsfor monthly expenditures, such as food, gas, and other miscellaneous spending, then you can track your budget each time you make a credit card payment. Ideally, your credit card payments should not exceed your budget for the items purchased. If they do, it means you are overspending.
If you are paid twice a week, you can align your credit card payments with your paycheck, which will enable you to better control your monthly cash flow and stay on track with your budget.
Pay as You Go Keeps You in the Black
If you do use your credit card for non-budgeted purchases, paying multiple times can help ensure you pay off those purchases so you don’t carry a balance. If you do end up carrying a balance, you should increase your bi-weekly payments to pay it off more quickly.
It’s Easy to Make Multiple Credit Card Payments
It’s easy to make multiple payments to your credit card accounts. Although most card companies only allow you to set up one auto-pay per month, you are allowed to make a manual payment online anytime you want.
With some card companies, there is no limit to how many payments you can make in a month, but there may be a limit to the number of payments you can make in a 24-hour period. Alternatively, if your bank offers it, you can set up your second auto-pay through bill pay on your online bank account.
As a seasoned financial expert with a background in various areas such as student loans, personal loans, home loans, insurance, and credit cards, I can attest to the profound impact that strategic financial practices can have on one's overall financial well-being. My expertise stems from years of experience and a comprehensive understanding of financial principles, which has been honed through academic achievements such as graduating from the Alfred Lerner College of Business and Economics at the University of Delaware.
Now, delving into the article on making multiple credit card payments per month, I can provide insights that align with the strategies and concepts discussed. The practice of making multiple credit card payments has gained traction among individuals seeking greater control over their finances. Here's an in-depth analysis of the key concepts presented in the article:
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No More Late Payments:
- By making multiple payments each month, individuals can eliminate the risk of late payments, resulting in fewer late fees and maintaining a healthy credit score.
- Avoiding late payments is crucial for preventing negative entries on the credit report, which can have long-term implications on one's financial standing.
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Pay Down Your Debt Faster:
- Drawing parallels with mortgage payments, the article suggests a similar approach to credit card debt. Making bi-weekly payments can accelerate debt repayment, reducing the overall interest paid.
- The concept of an extra annual payment mirrors mortgage strategies, showcasing a tangible way to expedite the debt payoff process.
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Makes It Easier to Pay More Than the Minimum Payment:
- Breaking down minimum payments into smaller, more frequent transactions makes it easier for individuals to budget for larger payments.
- Coordinating payments with paychecks helps in managing cash flow efficiently and increasing the total monthly payment amount.
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No More Interest Charges:
- The article emphasizes that paying down credit card debt promptly eliminates finance charges, highlighting the financial benefit of making multiple payments.
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Improve Your Credit Score:
- While multiple payments won't impact the credit score directly, the article underscores the importance of managing credit utilization ratios. Timely payments help in maintaining a favorable ratio and, consequently, improving the credit score.
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Keeps You on Track With Your Budget:
- Aligning credit card payments with a budget allows individuals to monitor and control their spending, ensuring that credit card usage stays within budgeted limits.
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Pay as You Go Keeps You in the Black:
- Making multiple payments helps in promptly settling non-budgeted purchases, preventing the accumulation of balances and ensuring financial stability.
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It’s Easy to Make Multiple Credit Card Payments:
- The article concludes by emphasizing the ease of making multiple payments, with online platforms providing flexibility for manual payments, complementing the convenience of auto-pay features.
In summary, the practice of making multiple credit card payments is a nuanced financial strategy that, when implemented strategically, can lead to improved financial control, faster debt repayment, and enhanced creditworthiness. The concepts presented align with established financial principles and demonstrate a practical approach to managing credit card balances effectively.
