I put $4k on my credit card, then paid it off in 24 hours. Was this a mistake?

It’s easy to overthink things when it comes to credit cards and the impact on one’s credit score. Undoubtedly, if you’ve checked your score and aren’t happy with it, the good news is that a few simple changes to your routine can help you bump up your score in due time. Of course, it’s vital to steer clear of the potential pitfalls that can set your credit score back a bit.

Most notable among them, of course, is missing payments or only making the minimum payment when your monthly bill comes due. Indeed, the credit card company probably won’t complain since they’re changing the obscene interest on your outstanding credit card debts. Either way, provided you’re paying full amounts within a month (if you’re not on a zero-rate card), you’re not making a mistake.

However, there is a chance that you may not be making the optimal move if you’re paying the fall balance within one business day. Indeed, there’s limited benefit to paying off a credit card balance ASAP. But if it means not forgetting to pay the four-figure debt by month’s end, it can be a good move to pay off balances sooner rather than later. Of course, the best way to avoid forgetting is to set up automatic payments, which will allow you to maintain relative liquidity through the month without requiring you to set a reminder on your calendar to pay off the debt.

In this piece, we’ll tune into the case of a Reddit user who’s made a habit of paying off their credit card within 24 hours. It’s a wise move that can help build credit, and I think there’s little issue with doing so, especially since it will allow one to not think about credit card bills at the end of the month.

Paying off a credit debt within the day isn’t a “mistake” per se. But it’s not the optimal way to build credit.

Though pulling out your phone to pay off debts in the shop, minutes or even seconds after the debt is put on your credit card, may seem like putting yourself in the fast lane towards an 800+ credit score, you should know that such urgency may be met with diminishing returns.

Of course, it’s incredibly inconvenient to pay up a debt within a day’s time. Not to mention you’d be effectively driving your credit utilization rate (the percent of your credit limit used at any given time) to zero, which isn’t exactly the sweet spot for building credit.

Undoubtedly, if your monthly bill comes in at $0 owed for several months, credit bureaus may gain the impression that you’re not using your credit card. That’s why I’d aim to keep a small, maintainable balance, rather than shooting to have zero at any given time. By aiming for a 1-4% utilization rate, you may be giving your credit a shot in the arm. Not to mention, it’ll be a lot more convenient to pay things off in two to four weeks than within a business day after you’ve incurred debt.

Paying off some of the debt immediately could make sense.

For many people, a $4,000 outstanding balance is a considerable sum to have sitting on a credit card. If your credit limit is $5,000, your utilization would soar to 80%, a level that’s not exactly conducive to building credit. As a rule of thumb, those seeking to make progress on their credit scores should keep their credit score below 30%.

Personally, I think it’s best to keep it between 0-10%. Depending on one’s credit limit, paying off half or more of the balance immediately could be wise so that one will maintain a utilization that’d give one the biggest boost for any given month.

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