Is it good to make two credit card payments a month?

Splitting Your Payments: The Smart Strategy of Double Credit Card Payments

Many people strive for a perfect credit score, a crucial element in securing loans, mortgages, and even better interest rates on everyday purchases. While there’s no magic bullet, strategic credit card management plays a significant role. One increasingly popular technique is making two credit card payments per month. But is this extra effort truly beneficial, or just unnecessary fuss?

The answer, in short, is a qualified yes. Regularly making two payments each month can indeed positively impact your credit score, primarily by significantly lowering your credit utilization ratio. This ratio represents the amount of credit you’re using compared to your total available credit. Credit bureaus view a high credit utilization ratio (generally above 30%) as a risk factor, suggesting you might be struggling to manage your debt.

By making two payments, even if the total amount is the same as a single larger payment, you dramatically reduce your credit utilization throughout the billing cycle. Imagine you have a $1000 credit limit and a $500 balance. A single payment of $500 before the due date leaves your utilization at 0% for the remainder of the billing cycle. However, making a $250 payment mid-cycle reduces your utilization to 25% for half the billing period and then to 0% after the second payment. This consistent lower utilization is viewed favorably by credit scoring models.

Furthermore, this strategy is particularly useful for those with unpredictable income or expenses. By making smaller, more frequent payments, you can better manage your finances and avoid unexpectedly high utilization ratios at the end of the billing cycle.

However, simply making two payments isn’t a guaranteed path to a perfect score. Other factors such as payment history (always paying on time!), length of credit history, and credit mix (different types of credit accounts) also significantly impact your score.

A crucial caveat: Don’t close unused credit cards to improve your utilization ratio. While it might seem counterintuitive, closing unused accounts actually reduces your available credit, thereby potentially increasing your utilization ratio even if your spending remains the same. The overall amount of available credit is a factor considered in your credit score. Keeping those dormant cards open, even if you don’t use them, contributes positively to your creditworthiness.

In conclusion, making two credit card payments a month is a proactive and effective strategy to improve your credit score by keeping your credit utilization low. However, it’s just one piece of the puzzle. Combine this with responsible spending habits, timely payments, and maintaining a healthy credit mix for the best possible results. Remember to consult with a financial advisor for personalized advice tailored to your specific financial situation.