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On a salary of $100,000 per year, as long as you have minimal debt, you can afford a house priced at around $311,000 with a monthly payment of $2,333. This number assumes a 6.5% interest rate and a down payment of around $30,000.

The 28/36 rule is often used as a guide when deciding how much house you can afford. The rule stipulates that you should not spend more than 28 percent of your salary on overall housing costs and no more than 36 percent on housing costs and your debt. On a salary of $100K with debts of about $250 per month, a house costing $311,000 just fits in your budget.

However, how much home you can afford depends on other factors also, such as where you intend to live and how much you have saved as a down payment.

This article looks at how all of these factors affect your home purchase and gives some examples of how much home you can realistically afford on a salary of $100,000.

What Kind of House Can I Afford With $100K a Year?

Another rule of thumb often applied when buying a home is to not spend more than three times your annual income on a home. If you earn $100,000 a year, that would be $300,000.

A salary of $100,000 is well above the national median income (according to Census data, the national median income was $74,580 in 2022). That puts you in a good position if you want to buy a home, particularly if the cost of living is low in the area that you are targeting. If you have substantial savings for a down payment and little debt, you’re even better positioned. Debt is important because lenders look at how much debt you have when they qualify you for a mortgage.

Your Debt-to-Income Ratio

Your debt-to-income (DTI) ratio is the amount of income you receive relative to the amount of payments you make each month to cover your debt. You’ll get better loan terms, and your monthly mortgage loan payments will be less, if you have less debt.

That’s why many experts also recommend the 28/36 rule. So, if you earn $100K, your housing costs should be less than $28,000, $2,333 a month, and your debt and housing costs should not exceed $36,000, or $3,000 a month.

Your Down Payment

Unless you qualify for a zero-down USDA or VA loan, most lenders will expect a down payment of between 3% and 20%. The more you put down, the more house you can afford, but as you think about your down payment amount, make sure you reserve funds for closing costs, moving costs, and an emergency fund for unexpected expenses.

Home Affordability

Homes are more affordable in certain areas. Some areas have a higher cost of living and higher property taxes.

Your credit score will also affect how much home you can afford. If you have a high credit score, you will qualify for a lower interest rate loan. If you pay less interest, you can borrow more and still meet your monthly payments.

Depending on where you want to live, the housing market might dictate how big a home you can afford. House prices are affected by the economic conditions, and low unemployment rates and healthy economic growth gives buyers more purchasing power. If buyers have more purchasing power, they can afford bigger loans, and this will push up house prices.


💡 Quick Tip: When house hunting, don’t forget to lock in your home mortgage loan rate so there are no surprises if your offer is accepted.

How to Afford More House with Down Payment Assistance

Some people, such as first-time buyers or certain professionals like nurses and teachers, can qualify for down payment assistance from federal, state, and local government, private entities, and charitable organizations. Assistance might be in the form of a low-rate loan, cash grant, tax credit, or a reduced interest rate.

Applying for down payment assistance can add weeks or months to your home buying timeline, but for more information, the U.S. Department of Housing and Urban Development (HUD) keeps a list of programs listed by state, county, and city.

Here are typical down payment amounts for various types of mortgages.

•   Conventional mortgages require a 3% down payment for first-time buyers

•   FHA mortgages require 3.5% down

•   VA mortgages require 0% down

•   USDA: These zero down payment loans serve low-income borrowers in rural areas.

Home Affordability Examples

Let’s take a look at some hypothetical examples for those wondering, “If I make $100K how much home can I afford?” These examples assume an interest rate of 6.5% and average property taxes.

Example #1: Low Down Payment and Significant Debt

Gross annual income: $100,000
Down payment: $10,000
Monthly debt: $1000

Home budget: $238,441

Monthly mortgage payment: $2,000

Payment breakdown:

•   Principal and interest: $1,444

•   Property taxes: $208

•   Private mortgage insurance: $264

•   Homeowner’s insurance: $83

Example #2: Bigger Down Payment, Less Debt

Gross annual income: $100,000
Down payment: $40,000
Monthly debt: $300

Home budget: $333,212

Monthly mortgage payment: $2,333

Payment breakdown:

•   Principal and interest: $1,853

•   Property taxes: $208

•   Private mortgage insurance: $188

•   Homeowner’s insurance: $83

How to Calculate How Much House You Can Afford

You need a budget to find out how much house you can afford. Keeping a budget will show you how much you are spending each month versus how much income you have. Whatever you have leftover after paying essentials like food, clothing, and utilities is how much you can afford to spend on housing.

You can also use a mortgage calculator to help you. Just plug in your own numbers to find out what your monthly payments would be.


💡 Quick Tip: Not to be confused with prequalification, preapproval involves a longer application, documentation, and hard credit pulls. Ideally, you want to keep your applications for preapproval to within the same 14- to 45-day period, since many hard credit pulls outside the given time period can adversely affect your credit score, which in turn affects the mortgage terms you’ll be offered.

How Your Monthly Payment Affects Your Price Range

The more you can afford to pay each month for your mortgage and other housing expenses, the more house you can afford. However if you have significant debt payments each month, or you have a poor credit score that results in a higher interest rate for your loan, that will reduce the amount of loan you can afford and the price range.

Types of Home Loans Available to $100K Households

Four types of loans are the most common. These are conventional loans, FHA loans, USDA, and VA loans.

Conventional loans typically require a credit score of 620 or more, but the down payment can be as low as 3 percent. Remember that a lower down payment means higher monthly payments because you will have to borrow more.

FHA loans. With an FHA loan, home buyers with a credit score over 580 can borrow up to 96.5% of a home’s value. Home buyers with a lower credit score, between 500 to 579, can still qualify for a loan as long as they have a 10% down payment.

USDA: USDA loans are zero down payment financing for low-income borrowers in designated rural areas.

VA: VA loans also require no down payment and are available to qualified military service members, veterans, and their spouses.

The Takeaway

If you are looking to buy a home and would like a more realistic idea of what you can afford, first find out how much you are spending on necessities like food, clothing, transportation, and, most importantly, debt. What you have leftover is how much you can spend each month on housing expenses.

Once you have a grasp on your finances, you can use an affordability calculator to see how much of a house you can afford. The size of home that the amount will buy depends on the local housing market and the cost of living where you want to live.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

FAQ

Is $100K a good salary for a single person?

A salary of $100k is above the national median income (according to Census data, the national median income was $74,580 in 2022). This is a good salary, but you still might struggle to buy a home in areas with a high cost of living. The larger down payment you have, and the better your credit score, the bigger house you can buy.

What is a comfortable income for a single person?

A comfortable income for a single person is dependent upon where that person lives. The findings from a study using data from the Bureau of Labor Statistics to calculate the cost of necessities to determine a living wage shows wide variance existing among states. According to the study, Hawaii is the most expensive state, and singles require an annual salary of $112,411 to live comfortably. In Mississippi, you can live comfortably on $45,906 a year.

What is a liveable wage in 2023?

A liveable wage will vary depending on where you live. However, the Massachusetts Institute of Technology determined that $104,07 per year was a liveable wage before taxes in 2022. This was for a family of four with two working adults and two children.

What salary is considered rich for a single person?

According to Internal Revenue Service data, an income of $540,009 per year puts a person in the top 1% earnings category.

Photo credit: iStock/Prostock-Studio

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Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

⁺Lock and Look program: Terms and conditions apply. Applies to conventional purchase loans only. Rate will lock for 91 calendar days at the time of preapproval. An executed purchase contract is required within 60 days of your initial rate lock. If current market pricing improves by 0.25 percentage points or more from the original locked rate, you may request your loan officer to review your loan application to determine if you qualify for a one-time float down. SoFi reserves the right to change or terminate this offer at any time with or without notice to you.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

^¹FHA loans are subject to unique terms and conditions established by FHA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. FHA loans require an Upfront Mortgage Insurance Premium (UFMIP), which may be financed or paid at closing, in addition to monthly Mortgage Insurance Premiums (MIP). Maximum loan amounts vary by county. The minimum FHA mortgage down payment is 3.5% for those who qualify financially for a primary purchase. SoFi is not affiliated with any government agency.
^†Veterans, Service members, and members of the National Guard or Reserve may be eligible for a loan guaranteed by the U.S. Department of Veterans Affairs. VA loans are subject to unique terms and conditions established by VA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. VA loans typically require a one-time funding fee except as may be exempted by VA guidelines. The fee may be financed or paid at closing. The amount of the fee depends on the type of loan, the total amount of the loan, and, depending on loan type, prior use of VA eligibility and down payment amount. The VA funding fee is typically non-refundable. SoFi is not affiliated with any government agency.

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While there are many different methods for paying your credit card, it is not always straightforward to pay a credit card from another bank. This can be problematic, since credit cards are becoming more and more prevalent as many people’s preferred method of payment.

If you choose to pay your credit card from another bank via check or an automated transfer, it should be fairly simple to do. However, you may not be able to pay a credit card directly via a debit or credit card issued by another bank. You might wind up in the latter case using a cash advance, which will probably involve higher costs.

Read on to learn more about how to pay a credit card from another bank.

How to Pay Off a Credit Card With Another Bank

The easiest way to pay off a credit card from another bank is with a check, bill pay, or ACH transfer from your bank. While writing checks has become less popular, many banks offer a bill pay service that would allow you to have your bank send a check to pay your credit card bill.

If your credit card issuer allows it, you may also be able to enter your account and routing numbers on your online card account and have your payment directly drafted from your bank account.

When Should I Pay My Credit Card Bill?

Paying your credit card bill regularly is an important factor used in calculating your credit score. So it’s a good idea to either set up automatic payments that will pay your bill each month or to have a system that makes sure you complete those payments each month.

It can be extra important to pay off a large credit card bill, since the amount of your available credit that you’ve used is another factor that makes up your credit score. Your credit utilization ratio is how much you are carrying as a balance vs. your credit limit. It’s expressed as a percentage, and you’ll want to keep it as low as possible. Lenders typically like to see that figure as no more than 30% (10% is even better) when reviewing your finances.

Why You Should Pay Your Credit Card Bill on Time

One of the factors that is used to calculate your credit score is your payment history, and late payments can have a negative impact on your credit score. The way that most credit card payments work is that you often do have a grace period after the due date before your payment is reported as “late.” Still, you should do your best to pay your credit card bill on time, each and every month.

On-time payments are the single largest contributing factor to your credit score at 35%.

Why You Should Pay Your Credit Card Bill Early

In some cases, it can make sense to pay your credit card bill early, even before it is officially due. The 15/3 credit card payment method is one strategy that encourages users to make a second payment to their credit card account in the middle of the month. This can help to keep your credit card utilization ratio low, which can help build your credit score.

How Can I Pay My Credit Card Bill?

You have several different options for paying your credit card bill. Here are a few of the most common ways to pay your bill.

Online Payments

Probably the easiest way to pay your credit card bill is with an online payment.

•   Most issuers allow you to set up automated credit card payments by entering in your routing and account numbers in your online credit card account.

•   You may also be able to use your bank’s bill pay feature to pay your credit card bill online.

•   You may be able to use a debit card to pay a credit card in some cases. However, most credit card issuers are likely to prefer drawing directly from your bank account vs. deducting funds via a debit card.

Over the Phone

Many credit card issuers allow you to make credit card payments over the phone, using a touch tone keypad. You’ll need to have your bank’s account and routing numbers to pay over the phone.

With Cash

If you’re looking to pay using cash, you may have a more difficult time. One option might be to use your cash to buy a money order which you can mail to your credit card company to pay your bill. Or, your credit card company may have relationships that allow you to pay your bill at the customer service desk of certain retailers.

Can You Pay a Credit Card With Another Credit Card?

You generally cannot directly pay a credit card with another credit card. If you’re looking to use your available credit on one card to pay the bill of another card, you generally have two options — a balance transfer or a cash advance. Both of these options typically come with fees, so they should be used as a method of last resort in most cases.

Should You Carry a Balance on Your Credit Card?

While there may be some times that you will need to carry a balance on your credit card, you should avoid it when possible. Carrying a balance on your credit card raises your utilization rate, which generally has a negative impact on your credit score. That’s why, when possible, you want to know how to pay off a credit card from another bank every month and not carry a balance.

Another note: Remember that you’ll also be charged interest on any outstanding balance on your card. Credit card debt is typically considered high-interest debt, with rates currently topping 20% on average.

When Do You Receive Your Credit Card Bill?

With many credit card issuers, you receive a monthly statement around the same time of the month. Your credit card payment due date may be three weeks or more after that, and you may have a grace period after that before your payment is considered officially late.

If you don’t want to have to worry about remembering when you receive your statement or when your payment is due, you might consider setting up automatic payments.

Tips for Paying Credit Card Bills

One of the best tips for paying credit card bills is to set up automatic payments, or what may be called autopay. You can do that either through your bank or by entering your bank’s information in your credit card online account. Setting up automatic payments eliminates the chances that you will forget about making your payment and end up being charged interest, late fees, or both.

Recommended: Guide to Paying a Credit Card with a Debit Card

The Takeaway

The easiest way to pay a credit card from another bank is by using your bank’s account and/or routing numbers to transfer funds. You can either set up payments on your online credit card account using that account information or use your bank’s bill pay service to pay a credit card from another bank. There usually is not a way to pay a credit card directly with a debit card or another credit card, and the indirect methods may trigger fees.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

FAQ

How do I pay my credit card bill with another bank credit card?

There is generally not a way to directly pay a credit card bill with another bank credit card. You can use a balance transfer credit card to transfer the balance of one credit card to another, but there are often fees associated with this. You could take a cash advance to pay a different credit card, but you’ll usually be charged fees and interest.

Can you pay a credit card online from a different bank?

Yes, it is often possible to pay a credit card online with the information from a different bank. Most credit card issuers allow you to set up payment information either over the phone or through your online account using your bank account’s routing number and your account number.

Can I pay my credit card bill with another bank debit card?

No, it is not generally possible to pay a credit card with a debit card, at least not directly. To pay a credit card from a different bank, you typically need to use your bank account details to set up a payment in your online credit card account, if your issuer supports that.

Photo credit: iStock/VioletaStoimenova

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

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Credit card management apps can help you stay on top of your credit card balances, payment dates, and rewards. But as with most things in life, there can be pros and cons to using these apps.

Here, you’ll learn about the ins and outs of a credit card management app, plus some general tips to managing your credit cards.

What Is a Credit Card Management App?

A credit card management app can help you manage multiple credit cards that are in your rotation. You can think of the different credit card management apps falling into different categories.

•   The first group of credit card management apps is designed to track credit cards and help you stay on top of payments. Common features include tracking your credit utilization, payment due dates, payments, and remaining balance, and helping you stay on the path to repaying your credit card debt.

•   The next type is a money management app or debt tracker app. Both sync up to your credit cards and track recent credit card transactions, minimum payments due, and payment due dates. Some money management apps offer free credit score and credit monitoring. In turn, you can save time and stress wading through credit card statements.

•   There are also credit card management apps to keep track of your credit card rewards and travel points.

As you review different credit card management apps, some of the ones you may see are Tally, AwardWallet, and Debt Payoff Planner.

Many credit card management apps are free, though some have a monthly subscription fee. Prices for the programs that do require payment (and may come with extra features) can be about $30 per year, though costs run from $2 to $12 a month. Often, you can receive a discount for paying annually versus monthly.

Recommended: Mobile Banking Features

Common Features of Credit Card Management Apps

Here are some common features of credit card management apps:

•   Syncs to your credit card accounts. By linking your credit card accounts to the app, you can track transactions, such as recent purchases and refunds. Plus, you can see when your payments were posted.

•   Tracks your payment due dates. Many money management apps enable you to monitor when your payments are due. This might be a calendar view or a list of all your payment due dates and amounts.

•   Credit score and monitoring. Some money management apps offer free credit scores and credit monitoring, alerting you of when your score goes up or down. These alerts and checking your credit score regularly can help you pinpoint financial habits and patterns that might be impacting your score.

•   View credit card balances. A credit card management app can show not only your credit card balances but also the interest rates and credit utilization, which is how much balance you’re using against all your cards. It can also indicate how much of your credit limit you have remaining.

•   Tracks credit card points and travel rewards. Apps that track credit cards specifically can help you make the most of your credit card rewards. There are apps that also help you maximize your rewards points earnings on every card.

Recommended: Leveraging Credit Cards to Build Wealth

Benefits of Credit Card Management Apps

Here are the perks of adding a credit card management app to your toolkit.

•   Keeps you organized. You don’t have to muddle through a pile of credit card and bank statements to make heads or tails of when your payments are due and what purchases you put on your cards.

•   Makes it easier to keep track of credit usage. By using a single app, you won’t have to log on to all your different credit cards to see which purchases you’re putting on your cards, how much you owe on your balances, and your credit utilization, which is how much you’ve used of the credit limit on all your cards.

•   Helps pay off credit card debt quicker. Some credit card apps have handy features to help you knock down debt at a much speedier pace. For instance, the app might detect “extra funds” you have in a given month. That’s money you can put toward one of your outstanding balances.

•   Helps avoid falling behind on payments. With due dates and reminders to set on your app, you won’t be scrambling to remember when you need to pay off each credit card bill. In turn, you’ll have an easier time staying on track. Plus, you can consider setting up automated credit card payments.

Reasons to Use a Credit Card Management App

Here are a few reasons why you might want to consider linking up your credit card accounts to a credit card management app.

•   Tracking your transaction history at a glance. Instead of muddling through a stack of credit card and bank statements, you can see your recent purchases through a credit card management app.

•   Understanding your financial behaviors better. You can gain a better understanding of your spending habits (such as impulse buying) and how much credit card debt you owe at a given time.

•   Organizing your credit card account. You can stay organized with the payment schedule and the minimum payment amounts.

•   Managing debt. Some credit card management apps include debt tracker tools to help you monitor your progress on your different cards.

•   Optimizing credit card rewards. Credit card management apps might help you find ways to maximize your credit card rewards. You can calculate your rewards, stay on top of deals and offers, and integrate loyalty programs.

The Takeaway

A credit card management app can help you keep tabs on your credit cards without having to log in to multiple credit card apps or maintain a complicated spreadsheet. These apps can optimize your ability to stay on top of payments, monitor your credit usage, and make the most of a card’s rewards and perks.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

FAQ

What is the app that combines all your credit cards?

There are a couple of apps that help you monitor all your credit cards and track your outstanding balances and credit usage. Some say their goal is to help lower your credit card payments and manage your debt.

Is it safe to have a credit card app on your phone?

It is generally safe to have a credit card app on your phone. Credit cards on mobile phones have the same fraud protection as online or in-store purchases. Your liability is capped at $50 for unauthorized transactions. Plus, thieves and fraudsters won’t be able to get their hands on your physical card and skim or steal it.

How do I manage all my credit cards in one place?

Using a credit card management app may help you stay on top of your credit card activity in one place. There are different kinds of such apps, which have varying features and tools, from rewards tracking to debt payoff strategies.

Photo credit: iStock/Mindful Media

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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While many people use cash less often today, you can still use it to pay a credit card bill at some ATMs and retail locations or by using mail technique (money orders; no $20s in the envelope).

You might want to pay your credit card in cash if you work in a cash-based business, or a relative hands you an envelope of $20 bills as a birthday gift. It’s good to know that you can pay your plastic with that money at some ATMs and retail locations or by sending a money order.

Here, you’ll learn more about paying a credit card bill with cash and other ways to pay, as well as tips for keeping your credit card account in good standing.

When Should I Pay My Credit Card Bill?

Before diving into ways to pay your credit card bill, consider gaining some knowledge about the billing cycle so you can better understand how and when to pay a credit card bill.

•   A credit card’s billing cycle is the time between two statement closing dates. This period is usually anywhere from 28 to 31 days.

•   Another important tidbit about credit cards: A grace period for a credit card exists between the end of the statement closing date and your credit card payment due date. During a grace period, you aren’t charged any interest.

•   You always want to pay your credit card bill (at least the minimum payment) by your payment due date — for good reasons that you’ll learn about next.

Why You Should Pay Your Credit Card Bill on Time

As mentioned, you should always pay your credit card bill by the payment due date to avoid negatively impacting your credit score. Here’s what you need to now:

•   Payment history is usually the largest single contributor to your credit score at 35%. Your score may dip if you fall behind on your credit card payments.

•   If you continue being late paying your credit card, your account could enter delinquency and then default. After you’ve defaulted on a credit card, your card will likely go to collections, which can seriously injure your credit score.

•   If you can manage to pay your credit card on time and in full, you won’t owe any interest charges. So those purchases you put on your card won’t cost anything in interest.

A sober truth: Americans dole out an average of $120 billion in credit card interest fees a year. Paying off your balance in full each cycle puts your share of that money back into your pocket.

Why You Should Pay Your Credit Card Early

You’ll carry a lower balance when you pay your credit card before the due date. This means more available credit, which reduces your credit utilization ratio. (That’s the percentage of your credit limit that your current balance accounts for.) And the lower your credit utilization, the better.

Your payment history gets reported to the credit bureaus, and a lower credit utilization figure could help build your credit score.

If you’re carrying a balance, you’re charged interest daily on your balance. So, a lower balance by making an early payment means you’ll be paying less on interest fees.

Another reason why it’s a good idea to pay your credit card before the payment date is that it increases your available credit. If you were planning to make a major purchase on your card, you’ll usually have to spend within the credit available.

Recommended: Guide to Paying Credit Cards with Debit Cards

How Can I Pay My Credit Card Bill?

There are several main ways you can pay your credit card bill. Take a closer look at your options here.

Online Payments

Many credit card networks and companies offer the option to pay online. You can do this either through the card’s mobile app or by logging on to your account on your computer.

To make sure you’re always on top of your payments, you can opt for auto payment, which you may see called autopay. You can link a bank account, which sets you up for recurring monthly payments. You can choose whether you want to pay the minimum, full, or custom amounts each month. That way, you won’t have to quibble over whether you’ll remember to pay your bills. You just want to be sure you have enough money in your account to cover that payment so you can avoid the headache and fees that overdraft can trigger.

Recommended: How Do Credit Card Companies Make Money?

Over the Phone

Another way to pay your credit card bill is to call the number on the back of your credit card (or look for the customer service number online) and make a payment over the phone. Usually, this is an automated service, and you provide your bank routing and account number.

While this is a fairly convenient way to make a credit card payment, it’s easy to forget a payment due date and let it slip. There may also be a surcharge for paying this way.

By Mail

If you get paper credit card statements in the mail, you can also send payment via a check. Should you decide to go this route, you’ll need to be sure the check arrives to the credit card issuer before the cutoff time. It needs to arrive by 5pm the day it’s due or be deemed late.

With Cash

Yes, when your credit card bill is due, it’s entirely possible to pay using cash. If you’re wondering how you can pay a credit card with cash, there are typically three ways:

•   By making a cash payment through an ATM. You probably can only do so at the credit card issuer’s ATM. You select the option to send cash, then deposit the money at the ATM.

•   In-person, provided the credit card issue has physical branches.

•   By sending a money order (this is the secure mail technique alluded to above; don’t put cash in the mail).

Can You Pay a Credit Card With Another Credit Card?

Typically, you can’t use a credit card to pay off another credit card. In other words, you can’t link your credit card and make an online payment, nor can you swipe a credit card to make an in-person payment.

However, with a balance transfer, you move the balance from one card to another, usually to save on interest. In this way, you are technically using a new credit card to nix the balance from an older card, then paying the balance on the new card. This might be helpful if you are paying off a large credit card bill.

Another option could be getting a cash advance on one credit card to pay another. This, however, will usually involve a high interest rate and fees, so proceed with caution.

Should You Carry a Balance on Your Credit Card?

Carrying a balance means shouldering interest fees. Plus, you’re increasing your credit utilization, which can reduce your score. In a perfect world, you should aim to pay off your balance in full each billing cycle.

However, if you need to carry a balance on your credit card, make it a top priority to make the minimum payments and pay on time, all the time. Getting that bill paid on time, as noted above, can help build your credit.

When Do You Receive Your Credit Card Bill?

If you get paper statements, you can expect to receive your credit card statement at least 21 days before your bill is due. This is legally required of credit card issuers. In some cases, they might send you your bill before the 21-day mark.

If you opt for paperless statements, you can view your bill as soon as the billing cycle ends. Downloading your credit card bill from your card issuer’s app at the end of a billing period is also an option — and can be the most convenient one.

Tips for Paying Credit Card Bills

Staying on top of your credit card bill is an important part of your financial life. Credit card debt carries high interest in most situations and can spiral upward if you aren’t diligent about monitoring and paying your balance.

•   Set up autopay. The easiest way to make sure you pay your credit card on time is to set up automated credit card payments. You only need to do it once, and you can choose either to make the minimum payment, pay your monthly statement balance in full, or pick a specific amount.

•   Monitor your accounts. Mistakes can and do happen. To make sure there are no errors or fraudulent activity, comb through your transactions regularly. When looking over your statements, besides transactions you should see any refunds, credits, fees, your minimum payment, and how much of your balance remains.

•   Document cash payments. If you do decide to pay with cash, remember to get a receipt and make sure the payment shows up on your credit card statement.

•   Always pay on time. Make it a top priority to stay on top of your credit card bills. If you’re struggling to keep up, consider reaching out to your credit card issuer and seeing if they’re able to move your payment due date or temporarily lower your minimum monthly payment.

•   Make early payments. You can also break up your credit card payments in chunks, and pay a portion before your due date. This will increase your available credit limit, and lower your credit usage, which can help your credit. Plus, you’ll be paying less on interest.

One method you can try is the 15/3 credit card payment method. You split your credit card payment in half. Then, you pay half 15 days before the due date, and the remaining half three days before.

For example, your bill is due on the 24th of the month. And this month’s balance is $700. In this case, you pay $350 on the 9th of the month, and the other $350 on the 21st of the month. This can help you knock down your debt faster plus lower your credit utilization.

•   Make more than the minimum payment. To pay off your debt quicker and cut down on how much interest you pay, aim to pay more than your minimum. If you receive a tax refund or a work bonus, lucky you! When wondering what to do with a windfall, why not commit to putting at least part of it toward your credit card payments?

•   Take action if your credit card debt is getting too high. If you are struggling to pay off your debt or even the minimum due, it can be a wise move to look into such options as a balance transfer credit card, which will give you a period or no or low interest to play catch-up; using a lower-interest personal loan to pay off the card’s balance; or working with a nonprofit, well-regarded credit counseling agency to find solutions.

The Takeaway

It is possible to pay a credit card bill with cash. To do so, you will likely want to find the card issuer’s ATMs or branches, or you could use a money order. That said, whenever dealing with high-interest credit card debt, it’s wise to educate yourself about how the billing cycles and due dates work, so you can pay off the debt as well as possible and avoid snowballing interest charges. That can help protect your financial status.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

FAQ

What credit cards can you pay in cash?

Can you pay a credit card bill with cash? Yes: Most major credit card issuers accept cash to make your credit card payments. These include Chase, Capital One, Citibank, Discover, Bank of America, Wells Fargo, U.S. Bank.

How do I pay a bill with cash?

You can typically pay a credit card bill with cash in one of three ways: by visiting the card issuer’s physical location and making a payment, depositing a cash payment at a card issuer’s ATM, or purchasing a money order with cash, then mailing it to the credit card company.

Can I pay cash at an ATM for a credit card?

Yes, you can pay cash for a credit card, provided you are accessing your card issuer’s ATM. Then you’ll need to insert your card at the ATM, select the correct payment option, and follow the on-screen directions about how to proceed. You’ll need to insert the cash payment into the ATM and get a receipt for your transaction.

Photo credit: iStock/Abdullah Durmaz

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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Your credit utilization ratio is a factor that represents how much of your available credit that you have already used; the higher it goes, the closer you are to maxing out your credit limit, which can negatively impact your credit score.

Granted, there are several factors that make up your credit score, which is an important three-digit number that can impact your ability to borrow funds and at what interest rate. While the exact makeup and percentage of each factor varies depending on the company calculating the score, there are a few commonalities.

Since your credit utilization is one of the more important contributors to your credit score, it’s important to understand it. Here, you’ll learn what credit utilization is, how it impacts your credit score, and how to manage it.

What Is a Credit Utilization Ratio?

Credit utilization, history of payments, length of credit history, credit mix, and number of recent inquiries are among the factors that make up a credit score.

A simple way to calculate your credit utilization ratio is by dividing your current outstanding balance by your total credit limit. Your credit utilization ratio can be anywhere from 0% (you have a $0 balance) to 100% (your credit cards are all maxed out).

Generally, a low credit utilization ratio is viewed as a positive factor in determining your credit score. It can show that you aren’t living beyond your means and are managing debt well.

What Is Utilization Rate?

Your utilization rate is another name for your credit utilization ratio. In other words, it is determined by the amount of available credit you have and your current credit card balance. You can calculate your utilization rate by dividing your current balance by your total available credit. Lowering your utilization ratio can be a great way to maintain a good credit score.

How Utilization Rate Affects Credit Scores

Your utilization rate is one of the factors that makes up your credit score, along with other factors like your payment history, number and type of accounts, and your average age of accounts.

Having a low utilization rate is a positive factor in making up your credit score, so it can make good financial sense to keep your utilization rate down.

Financial experts typically recommend keeping your credit utilization at no more than 30%. While that’s not a rule, it’s a wise guideline to keep in mind.

Why Utilization Rate Affects Credit Scores

The reason your utilization rate affects your credit score is that it is explicitly named as a factor by the companies that calculate credit score. Having a higher credit utilization can decrease your credit score.

It makes a bit of sense, after all: If your total balance is approaching the available limit on your credit card, you may not have the financial cushion to weather an emergency. Having a balance too close to your credit limit might also indicate that you are struggling with cost of living or impulsive buying. That can give lenders pause if you are applying for additional credit.

How Can You Calculate Your Credit Utilization Ratio?

It’s fairly simple to calculate your credit utilization ratio, as long as you know the outstanding balance and your total credit limit for all your credit cards. Then it’s just a matter of basic math. Here’s how to find your number:

•   Add up your total balances across all of your cards.

•   Divide it by your total credit limit. The result is your credit utilization ratio.

Examples of Credit Utilization

Here are two examples of calculating your credit utilization ratio:

•   You have one credit card with a $10,000 credit limit, and you have a current balance of $2,000. Your credit utilization ratio is 20% ($2,000 divided by $10,000).

•   You have two credit cards, both with a $7,500 credit limit. You have a balance of $1,000 on one of your cards and a balance of $4,000 on the other card. Your credit utilization rate is 33.3% (a total balance of $5,000 divided by a total limit of $15,000).

How Can You Lower Your Credit Utilization Ratio?

There are a few ways that you can lower your credit card utilization. Consider these ideas:

Keep Credit Card Balances as Low as Possible

One of the best ways to lower your credit utilization ratio is to keep your card balances as low as possible. One way to do that is by following the 15/3 credit card payment strategy. This strategy has you make an additional credit card payment each month to keep your average balance as low as possible.

Pay Off Your Balances

In a similar vein, one way to keep your credit utilization ratio low is to start the habit of paying off your credit cards in full, each and every month. While there are differing opinions on whether you should pay off your credit card in full, there’s no doubt that doing so will help keep your utilization rate low.

Request a Credit Limit Increase

In addition to keeping your total credit card balance low, you can also lower your credit utilization ratio by increasing your total credit limit. Many credit card issuers will increase your credit limit after you have shown a positive usage history or if your underlying financials have changed.

If you have recently gotten a salary increase or paid down other debt, consider asking your issuer to increase your credit limit. This is not to say you should spend up to that limit, however (which could cause a decrease in your credit score). Rather, the goal is to make any balance you are working on paying down yield a lower credit utilization vs. the newly higher limit.

Apply for a New Credit Card

Because your utilization rate is calculated based on your total available credit, another way to improve your ratio is by applying for a new credit card. If you are approved, the credit limit on your new card will then be used in making the calculation. If nothing else changes, that will lower your utilization ratio.

This same concept is why it may not make sense to cancel unused credit cards. However, it could wind up negatively impacting your credit score as it could lower the length of your accounts on record, which is part of the score calculation.

The Takeaway

Your credit utilization ratio is defined as your total outstanding credit card balance divided by your total credit limit. This utilization ratio is one of the key factors that contributes to your credit score. Generally, a higher credit utilization leads to a lower credit score, and vice versa. If you are trying to build your credit score, lowering your utilization ratio can be a great way to make that happen.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

FAQ

Does high credit utilization lower credit score?

Yes, your utilization ratio is one factor that makes up your credit score, and a high credit utilization can lower your credit score. If you’re looking to build your credit score, one thing you can do is lower your utilization ratio by paying down your balance on existing credit cards or by increasing your total credit limit.

Why did my credit score drop when my credit utilization decreased?

While credit utilization is a major factor that makes up your credit score, it is not the only factor. Even if your credit utilization decreases, that may be offset by changes in some of the other factors (such as late payments) that make up your credit score, causing an overall decrease.

How does high credit utilization affect credit score?

Your credit utilization percentage is among the biggest factors that make up your credit score. A high credit utilization can be a negative factor that drags your credit score down. One way to build your credit score is to lower your utilization ratio, either by increasing your credit limit or paying down your existing balances.

Photo credit: iStock/Xsandra

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

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