Paying your credit card twice a month can boost your credit score — here's what to know

Whenever we discuss the benefits of using credit cards, we typically caveat it with the most important rule: pay your credit card bill on time and in full every month. Paying on time prevents late fees and helps build your credit score, while paying in full ensures you avoid tacking on high interest.

But what does taking it one step further — paying your bill twice a month — do? Here's what you need to know about the benefits of making multiple credit card payments in a billing cycle.

You can avoid paying credit card interest by paying your full statement balance by your card's due date. But since each payment date is roughly a month apart, you can do a lot of spending in that time, and sometimes it can get out of hand quickly. By paying your credit card twice a month, you'll be able to better track your spending over periods of time, and use that first payment as a financial check-in for the month.

If you're spending is higher than you anticipated, you can take steps to adjust your budget and figure out where to cut back. If you find you've been spending less, you could consider moving funds into a high-yield savings account, or maybe plan a little treat or special expense if you've been hitting your goals.

Everyone budgets differently, but for those looking for a digital budgeting tool, Monarch Money can help you sync your bank accounts, credit cards and other financial accounts into one central location, and you can customize your dashboard, which automatically updates every time you log in.

Five factors go into creating your credit score, and the total amount of debt accounts for 30% of your overall score. Your credit utilization ratio is the amount you currently owe compared to the total amount you can borrow, and is a big part of the total debt calculation. If your credit limit is $5,000 and you've spent $2,500 on your card, you're using 50% of your available credit.

A general goal to aim for would be keeping your credit utilization to 30% or lower, which is considered the "sweet spot" that shows credit card issuers that you're using credit responsibly. Paying your credit card twice a month can be a good way to manage your utilization because you'll have a lower balance reported to the credit bureaus at the end of the month when your statement closes. This is a useful tactic since credit utilization looks at not just your overall debt compared to available credit, but also how much of your available credit you're using on each card.

If you have more than one credit card with the same bank, you may be able to move credit limits between accounts. While this isn't always an option, certain banks—like Chase—let you move credit limits (with exceptions) between cards online.

For example, let's say you have both the Chase Sapphire Preferred® Card (see rates and fees) and the Chase Freedom Unlimited® (see rates and fees). If you're mostly using the Sapphire Preferred, you can use this tool to increase its credit limit and reduce the Freedom Unlimited's limit. While you may have the same total available credit, you'll have a lower credit utilization on that card.

Carrying a credit card balance from month to month typically means you're being charged interest on the unpaid portion, and credit card interest often accrues daily, not just at the end of the month. This means that every day you continue to carry a balance, you're owing more and more money, thanks to compounding interest.

By paying your card at least twice a month, or even more often, you can reduce the amount of daily compound interest you'll be charged. If you owe money in the thousands, this could be a substantial amount of savings each day.

If you're planning on making a large purchase that may take you longer to pay off, you could consider using a 0% APR credit card to make sure you aren't hit with interest payments right at the start. The Wells Fargo Reflect® Card offers an intro-APR period of 21 months from account opening for both qualifying balance transfers and purchases, and comes with a no annual fee.

While paying off your credit card twice a month can be a good way to manage finances for some people, there are still negative aspects to be aware of.

Could create confusion

If you pay off your credit card multiple times per month, it becomes even more important to track when you paid and how much. Between due dates, current balances vs. statement balances, minimum payments and more, credit cards can be a lot to keep track of. While overpaying your credit card typically isn't too bad, underpaying could be expensive, so make sure you're tracking your payments well.

Less available cash

For many people, credit card bills are just one of the several expenses they pay each month, and if you're paying your card more frequently, you still need to cover your other costs. Additionally, by parting with your money sooner rather than later, you're missing any potential gains it could have earned you. If you let that money sit in a high-yield savings account such as a UFB Portfolio Savings account, you could be earning over a healthy APY with no monthly maintenance fees.

At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every credit card article is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of credit products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.

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