Using credit cards in the US is fun when you’re swiping, but after the spending comes the part where you have to pay it back (unless you’re planning to max everything out and disappear). As for the best time to make a payment, see our article When Should You Pay Your Credit Card Bill?. As for the available payment methods, today chanye will walk through them.
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Set Up Payments on the Card Issuer’s Website
This is probably the most common repayment method. In general, most credit card issuers let you add your own checking account on their website. After verification is completed, the card issuer can pull money from that checking account, and this process is usually free.
One-Time Payment
As the name suggests, this means making a payment just once. Generally speaking, you can choose the payment date, with the earliest option often being the next business day.
Here’s an important payment tip: for your credit profile, the smaller the balance reported on your credit card statement when it closes, the higher your short-term credit score is likely to be. So by using a one-time payment to pay off all or most of the balance before the statement date, you may be able to boost your score temporarily. This can be especially useful if you’re planning to apply for a mortgage or auto loan soon.
Autopay
Of course, manually scheduling payments every time is doable, but people are lazy. Also, many credit card hobbyists have quite a few cards (chanye has about 25+ cards still alive), and not all of them are with the same issuer, so setting them one by one can be a hassle.
That’s when setting up autopay becomes especially useful. Having the required amount paid automatically every month helps you avoid the headache of forgetting a payment and getting hit with a late fee.
One thing to note is that each bank handles autopay scheduling differently. Some let you schedule based on the due date, for example a certain number of days before it. Others schedule based on the statement date, for example a certain number of days after it.
For this reason, chanye usually sets up autopay on every card. The payment date is typically set for two days before the due date, just in case a payment fails and causes a late fee. Although late fees can often be waived if you call customer service and ask nicely, it’s still better to avoid the trouble in the first place.
Set Up Payments from Your Bank Account Website (Bill Pay)
For online payments, besides having the credit card issuer pull from your checking account, you can also push money from your checking account to the credit card. The first method was discussed above; the second is the Bill Pay method covered here.
To set up bill pay, there is usually a “pay bill” button or something similar on your bank’s website. After entering that section, you’ll be asked to choose a payee. At that point, just enter the name of your credit card issuer, such as "Citi creditcard", etc. Credit card issuers are usually already stored in the bank’s payee database, so the system will match them automatically (sometimes it will ask you to choose from matched options). After selecting the correct one, just enter your credit card number in the account number field on the next page.
Then you can set the payment date and amount. In general, there may be a gap of several business days between the date you initiate the bill pay and the date the credit card issuer receives it. The exact timing depends on both the sending bank and the receiving issuer.
It’s worth mentioning that in theory, Bill Pay can be used to pay someone else’s credit card, and likewise someone else can use bill pay to pay your card. However, accepting someone else’s bill pay can be risky and may very well trigger a bank shutdown. Chanye won’t go into the details here, but simply put, the bank may have reason to suspect money laundering and terminate its relationship with you.
Fees for this payment method depend on the sender’s rules: some banks offer it for free, while others charge. Chanye often uses Discover’s bill pay. Not only is it free, but Discover also gives you a 10-cent reward for each bill pay transaction. Every little bit counts. Also, chanye likes to keep balances low before statements close, but with many cards spread across different banks, that can be hard to manage manually. In those cases, chanye often combines Mint’s balance alerts with Discover bill pay, which is convenient and fast. In terms of speed, the payment usually posts to the credit card within two business days after initiating bill pay, which is pretty solid.
P.S. For MINT, see my other article A Great Budgeting Helper – Mint User Guide
Pay by Balance Transfer (BT) — Robbing Peter to Pay Paul
My one-sentence summary of a balance transfer is: robbing Peter to pay Paul.
Simply put, a balance transfer means using one credit card to pay another credit card. So it looks as though the balance has been transferred from one card to another, which is why it’s called a balance transfer.
Of course, banks do not provide this service for nothing, so BTs normally come with fees. The cost varies by card, but is generally the greater of a minimum fee (for example, $10) or a percentage-based fee (for example, 3%). After the BT, that transferred amount will also accrue interest. The interest rate is different from the purchase APR, and generally speaking it may be higher than the interest charged after the grace period on purchases, though it depends on the specific offer.
Also worth mentioning: sometimes banks run BT promos. In those cases, the fee may be lower, and there may also be a temporary low- or no-interest period. If you really need to shuffle debt around, this can be a relatively low-cost option.
P.S. For more on BT, see our articles Intro to Credit Card Balance Transfer (BT) and Practical Uses of 0% APR Purchase and Balance Transfer
Cash Payment at a Bank Branch
This method probably does not need much explanation. Just one risk reminder: banks are very sensitive to large cash transactions, so you should be aware of the risk of a full shutdown.
Pay by Phone
Most credit card issuers allow payment by phone. The process is to call customer service and make a payment over the phone. Operationally, it is similar to the checking-account pull method mentioned above, except this method is often faster. During business hours, it will often post the same day.
Phone payments were also once a way to liquidate Visa gift cards, because some banks accept debit card payments, and certain Visa gift cards could be used that way. But whether the payment will go through depends on the specific type of Visa gift card and the bank.
Pay by Check
You can certainly mail a check to the credit card issuer; just write your card number in the memo line. Of course, if you have not opted for e-statements, you will receive a paper statement from the issuer each month. Inside that envelope, there is usually a prepaid business reply envelope included. All you need to do is write the check, put it in, and mail it out.
Of course, this payment method takes quite a while. According to Discover, a payment by this method takes about 7-10 business days.
Naturally, you can also go to that bank’s branch and write a check there.
Risk warning: mail can get lost, and a lost checking check could potentially be misused, so please think carefully before using this method.
Pay Through Third-Party Payment Services
Walmart’s bill pay service can also be used to pay credit cards. See the official Walmart page for details.
That said, Chanye personally has not used this method. But according to the relevant FlyerTalk page, the fee varies depending on speed, at around $1-1.5 per transaction. If you’re interested, check the links above for more information.