Making multiple monthly card payments can improve your credit score

If you want to improve your credit score by making all your payments on time and keeping your revolving debt well below your credit limit, you are well on your way to success. After all, these are the two main factors in the FICO score that most lenders use to evaluate borrowers.

A great way to make sure your bills are always paid on time and debt never gets out of hand is to send multiple payments over the course of a month. Not only can this lead to a better credit score, but it also offers other undeniable benefits.

Here’s what you need to know about paying your credit card bill in stages, and when you might want to pay at the end of the month after all.

Benefits of frequent credit card payments

You are not required to wait until your credit card is billed before submitting a payment. The date shown on your account statement indicates when you need to pay to keep your account in good standing. So you can send multiple payments (also called micropayments) to your credit card issuer as many times as you like. Here’s how making multiple payments can help you:

Your credit score should increase

By consistently borrowing and returning on time and in full from your credit card, you prove that you are a responsible person. This is a sign that you are not relying on credit cards to make ends meet, but are instead using plastic like a seasoned pro. Credit scores are based on credit activity and since you will have a reliable history of flawless payments and no carry-over balances, your scores should go up. Any new lender will treat you as a low risk client and preferred accounts should be available to you soon.

You will always be in the black

It can be easy to overpay with a credit card, and many accounts have large limits that can be too tempting. However, if you pay each payment as it occurs, you will avoid accumulating unmanageable card debt. All you have to do is make sure you have enough money in your checking account to cover your expenses.

You will not receive interest or late fees

In addition to not having a big bill hanging over your head, paying all the time so that you never pay back the balance ensures that the lender does not add a financing fee to the transferred debt. Timely payments also ensure that there are no late fees.

You won’t sacrifice your rewards

If your credit card allows you to accumulate rewards such as cash, points or miles, you will avoid costly debt and profit from the process, especially if you spend a lot with the card. The more rewards you accumulate, the more you can exchange for goods, services and flights. Keeping the balance at zero also means that interest will not diminish the value of these rewards.

You will remain in financial control

Multiple payments can also give you an extra sense of control over your money. Not only will you not be shocked by the amount of any debt you have accumulated in a month, but you will most likely stay within your budget.

How to make micropayments

If you decide to use the micropayment method, consider the following payment options:

• Weekly payments. Once a week, check the current balance and pay the entire amount due.
• Salary payments. Take some money from every paycheck and send it to your credit card issuer.
• Pay as you charge. Every time you use a credit card, make a payment for exactly the amount you spent.

The easiest way to pay is with your credit card issuer’s free app, as you can send payment through your phone or tablet wherever you are. Almost all issuers offer apps, so if you haven’t already, download yours now.

You can also pay through the issuer’s website from your computer or call and pay by phone. Another option is to use your bank’s online bill payment system, and many financial institutions allow customers to set up automatic debits from their bank account a couple of times a month.

Although the process for each payment method is quick, it may take several days before the payment is sent. When this happens, your credit card balance will be reduced by the amount you sent.

When should you not make frequent credit card payments?

While frequent payments provide many benefits, there are a few potential downsides to be aware of.

All credit cards offer an interest-free grace period, which is usually 25 to 30 days. This time gives you the opportunity to charge for what you want or need and then wait to pay for it without being charged a funding fee. If you need to cover more important expenses first, paying the balance on a credit card that doesn’t cost you anything doesn’t make sense.

And then there’s the stress factor. Micropayments, even if they are a streamlined process, still take longer than a single payment at the end of the month. If frequent credit card payments are making your life too difficult and the process is bothering you, go back to one-time payments.

There may also be times when you want to charge for something important that you can’t afford to pay for quickly. In this case, repaying the debt in installments may be reasonable. Just send as much as possible (at least the minimum) in as short a time as possible. Your credit rating can be adversely affected by debt close to your credit limit, but when you bring your balance back to zero, it should recover.

bottom line

Sending multiple payments throughout the month can be an effective way to manage your credit card score, especially if your goal is to increase your credit score. While micropayments also offer a range of other financial and life benefits, the decision is always up to you. You can back off and wait for the bill to be paid at any time that suits you.

Erica Sandberg is a well-known personal finance professional and author of Waiting for Money: The Essential Financial Plan for New and Growing Families. Her articles and insights have been featured in The Wall Street Journal, Pregnancy, Babytalk, Redbook, Bank Investment Consultant, Prosper.com, MSN Money and Dow Jones MarketWatch. An active TV and radio commentator, Sandberg is a credit and money management expert at KRON-TV in San Francisco, and a frequent guest on Forbes Video Network, Fox Business News, Bloomberg TV and all Bay Area networks. Prior to starting her own reporting and advisory business, she worked at the San Francisco Consumer Credit Counseling Service, where she advised individuals, conducted educational seminars, and managed media relations. Sandberg is a member of the Society of American Business Editors and Writers and a member of the advisory committee for Project Money.