A key part of my budgeting strategy is to sit down every Friday and spend about 10 minutes paying my credit card and other bills, even if a payment is not due immediately.
There are three reasons why I pay my credit card bills every week and think you should try it. Let me explain!
1. I Never Miss a Payment
To avoid late payment fees, you must pay at least the minimums on your credit card bills every month by the due date. Therefore, I never have to worry about being hit with those penalties by paying weekly.
Payment history is the #1 factor in determining your credit score, so avoid late payments at all costs.
2. It Helps Me Stay on Budget
Next, paying my credit card bills every week gives me an opportunity to evaluate my spending habits more frequently and analyze whether I’m meeting my financial goals.
By reviewing my credit card transactions weekly (and paying them off), I can identify any problem spending.
There are typically no surprises when I look over the recent activity on my credit cards because of the simple budgeting method that I’ve written about extensively.
If you haven’t read my post about how I budget, here’s a summary of what I do:
- Set monthly spending limits with the Google Sheets budget template
- Use the Google Sheets app on the go to check my budget before making a purchase and ask myself, “Can I afford it?”
- Log and categorize the transaction immediately after making the purchase
Here’s an example: Every month, I set a spending limit for dining out. Before I go to a restaurant, I open the Google Sheets app and see how much money is left for the month. After paying the restaurant tab, I open up the app and record how much I spent. If I overspend in one category for the month, I can move money from another category to cover it.
There was a time when I was reviewing my credit card activity and realized that I made several trips to the grocery store that week — more than usual.
Going through those transactions one-by-one helped me adjust my behavior and get back on track.
3. My Credit Score Gets a Boost
The third and final reason why I pay my bills every week is to give my credit score a boost.
My credit score has been 800 or above for many years. In addition to making payments on time, I also keep my credit utilization low — the second most important credit score factor.
What this means is that I have relatively low use of my total available credit limit, so I’m less risky to lenders.
Paying off my balances in full every week is what’s helping me here. If you can’t pay off the total balance every week, at least try to avoid carrying a balance from month-to-month.
Action Plan
Now that I’ve listed the reasons why I pay my bills every week, here’s a quick action plan to help you get in the habit of doing it yourself.
- Set a day of the week to pay your credit card bills
- List all of your credit card accounts on a sheet of paper or use an app like Personal Capital*
- Go through the list every week and pay your credit card bills
While you’re just getting started, it may also be helpful to set a reminder on your phone for the first few weeks so that you don’t forget your bill payment day.
*If you use Personal Capital’s free money tools, find a list of your upcoming bills under Banking > Bills.
ONE MORE THING: Although I don’t set up automatic payments for my credit cards, many of my other bills are on auto-pay for convenience.
I don’t use auto-pay for the cards because I think it’s important to review transactions as I explained earlier.
For the one or two bills that I still get in the mail, I set them aside until the day of the week that I pay my credit card bills and pay them at the same time.
Over time, I’ve found that this is the best way to limit my weekly bill payment time to 10 minutes or less.