Many credit card providers allow you to opt in for “automatic payment” so that your credit card balance is automatically paid every month. Automatic payment will transfer money from your bank account towards your credit card balance every month. This can be very convenient for you and also improve your credit score as you will not miss any payments.
The best part about automatic payment is how convenient it is. It can be hard to remember to pay your credit card balance on time every month, especially if you are traveling or a first-time card holder. With automatic payment, you do not need to worry about missing or forgetting a payment.
Avoid Paying Late Fees
Because your credit card balance will be paid on time each month with automatic payment, you will avoid paying late fees. Late fees are often unnecessary and are simply a means of credit card providers telling you to pay your credit card consistently by the due date. Incurring late fees can add up, and make it harder for you to pay off your credit card balance.
Increase Your Credit Score
Overall, automatic payment will increase your credit score because you will be making payments on time. Although your credit score is based on a variety of factors, one of the biggest factors that impacts your credit score is your payment history. Automatic payment will create a positive payment history for you, and over time, lead to a better credit score which can have many benefits.
Setting up Automatic Payment
To set up automatic payment for your credit card, you first want to go online to your checking account. Most account providers will allow you to transfer money between accounts on a frequent basis. Transfer an amount of money on a monthly basis from your account to your credit card. Schedule this transfer to make it official, and automatic payment is all set up.
After setting up automatic payment, make sure that the account you are using has enough funds to pay your credit card balance. It would also be wise to review your credit card statement to avoid any misplaced charges or fee.
Overall, automatic payment provides a ton of convenience for you. By paying your credit card provider on time, you get to double down on your on-time payments which accounts for 35% of your credit score calculation.
In the next lesson, learn more about the How to Avoid the Most Common Credit Card Fees.