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Regularly paying your bills on time can help you avoid doling out money on interest and fees. It can also help build your credit score, which might help you snag the best interest rates when qualifying for loans or getting a credit card.

Fortunately, organizing your bills isn’t hard. You might use an old-school accordion folder and a calculator to manage the process. Or you might decide to handle the whole process digitally.

Here are some smart ideas for how to organize those bills.

1. Setting Up a Bill-Paying Station

Do you have a convenient spot where you can open, organize, and pay your bills? If you get paper bills, consider setting up a dedicated desk or area or (if space is tight) a roll-away cart. The goal is simply to keep everything in one place, instead of scattered around in your car, bag, or on the kitchen counter.

It’s a good idea to stock your station with all the items you’ll need to get the job done. Depending on how you pay your bills, this might include: envelopes, stamps, pens, your checkbook, a calendar, a filing system for sorting paper bills as they arrive, and storing those you’ve paid.

Or, if you pay your bills digitally, you could set up a separate virtual bill paying space. You might, for instance, set up an email account just for bills. This will ensure that you don’t overlook an electronic bill in the midst of the other emails you receive. You might also use your current email and create a folder, with subfolders, for anything related to your finances. That way, you’ll know exactly where to look if you need to check on a bill or other financial correspondence.

2. Making a Master List of Monthly Bills

Creating a list of every single bill you pay can be another way to help ensure that nothing falls through the cracks. It can also help you see where your money goes and how much money you have left after paying bills (if any).

You can do this with pen and paper, or create a printed out or online spreadsheet that includes a column for each month (allowing you to simply check off each bill as it gets paid). Check your bank account and credit card statements for bills you pay less frequently (annual subscriptions, quarterly membership fees, tax bills, etc.), and anything that’s on autopay.

For each bill, consider including: the vendor/service provider/lender, the account number, contact information, the bill’s due date, the date you think you should send/make the payment so it’s always on time.

For loan/credit card bills, you may want to also include the balance owed, and the minimum monthly payment.

You can use this list to make decisions about which bills you might want to set up by automating your finances and which you’ll pay manually.

And once it’s done, you can keep a copy on your bulletin board and/or in your files to use as a checklist.

Recommended: How to Pay Bills When You’ve Lost Your Job

3. Using Automatic Payments When Appropriate

Looking for other ideas on how to organize bills? There are two basic automatic bill payment options.

•   One is setting up automatic debit payments with a merchant or service, which involves giving them your checking account or debit card number and authorizing them to withdraw money on a recurring basis to pay a bill.

•   Another way is to authorize your bank or credit union’s bill pay service to send recurring payments to a company.

Either way you set it up, there are both pros and cons to using automatic payments, or autopay.

Here are the pros:

•   Autopay can help simplify your finances, since you don’t have to write out checks or log on to various websites to pay online every month.

•   It also ensures that it happens. The money is whisked out of your account before you have a chance to think about it or forget to think about it. Automating this process can help you save on interest and fees.

Here are the cons, because that out-of-sight-out-of-mind factor has a downside.

•   Autopay can make it easier to forget that you’re still paying for a subscription service you don’t use anymore, for example, or you might not notice when a bill’s amount is incorrect.

•   If you don’t have enough money in your account when an autopay bill goes through, you could end up overdrafting your account, which can lead to overdraft or NSF fees.

If you generally have plenty of money in your account and you regularly check your bank and credit card statements to make sure the charges are accurate, autopay might be a good fit.

But if your account balance fluctuates, or you’re likely to forget about small or infrequent charges if they’re paid automatically, you may want to use a different payment method (or at least for certain bills).

One other point: If many of your bills hit on the same day of the month, you might talk to some of your payees about whether you can change your bill due date. That could help you spread out payments over the month is a way that eases your financial pressure.

4. Putting a Bill Paying System in Place

Once you’ve decided which (if any) bills you’ll manage with automatic payments, you can move on to choosing a strategy for paying all your other bills, as well as keeping track of autopayments.

You can go as full-on techie as you like, or handle it with classic pencil and paper. The key is simply having a system.

Some options to think about:

Paying Bills Right Away

There’s no reason you have to wait for a specific day of the week or month to pay your bills. With this method, you would just open and pay bills as they arrive in the mail or online.

Setting up Reminders

Another option is to set up reminders for when you need to pay each bill, whether in your digital calendar or a paper one, if you use it. In addition, some companies and service providers allow you to sign up for bill reminder emails or texts.

Paying Bills on a Specific Day

If you don’t want to (or can’t always) sit down immediately to write a check or get online to pay, you could make it a weekly, biweekly or monthly routine.

With this method, you would file any bills that arrive in a “to pay” folder or inbox. You might also consider opening them and organizing them by the due date.

If the due dates are all over the place or difficult to manage, you may be able to get the dates adjusted simply by calling or emailing the company or service provider. It’s also a good idea to go through autopay notices to make sure you agree with the amounts charged.

Choosing the Best Way to Pay Manually

Many service providers and lenders offer customers several different methods for paying their bills.

Besides autopay, you might be able to use an app, a website, an automated phone system, deliver a payment in person, or send it in the mail.

No matter which option you choose, try to remember to always keep some sort of record of the payment in your files.

5. Keeping Good Records

In addition to checking off each paid bill on your master list, you may also want to create a system for managing your records after you’ve made your payments.

One option is to file paper copies of all your bills, noting on each how much you paid, when you paid, and how you paid (including any confirmation numbers for online or phone payments or check numbers for payments you mailed). If any of these bills are needed for tax purposes, you may want to make a copy and file it with your yearly tax documents.

Another option is to scan each bill and file them digitally on your computer’s hard drive or in the cloud, using a folder for the year that has subfolders for each month.

You may also want to create a real or digital file with all your credit and debit card receipts until you have a chance to reconcile them with your statements. (It’s a good idea to hold onto any receipt, bill, or statement until you’re absolutely sure you won’t need it for taxes or some other purpose, such as an insurance claim.)

6. Designating a Family Bookkeeper

Here’s another way to go about organizing your bills. If one spouse or partner has a knack for organization and bookkeeping and the other is less inclined, you might want to have the “numbers” person take the lead on the household’s bill-paying duties. (Have you ever missed a payment because you each thought the other would take care of it?)

Another option is to sit down together to work through the bills. Or, you might decide to alternate from month to month. You could make it a “money date” and do it over coffee at home.

No matter which approach you choose, consider setting up a regular time to sit down together and review the household budget, see how you stand, and make sure you both have access to account information, including passwords.

You also may want to consider setting up a separate account for paying household bills.

7. Using Budgeting Tools/Apps

Technology can step in and help you manage your bills, too. There are an array of ways to track your spending and paying. Your financial institution may offer digital tools for this, or you can download apps for this purpose, whether free or paid options.

You might want to experiment with a few and see which suits you best, depending on, say, whether pumping up your savings account or avoiding late payments is your key goal with organizing your finances.

8. Using the Cash Envelope Method

There are a variety of budget techniques you might use. One popular one is the envelope method, which involves setting key budget categories, writing the name of each on an envelope, and putting the designated amount of cash for the month ahead into it.

Then you pay the bills from the appropriate envelope as needed. Once the money from an envelope is gone, it’s gone. You either have to forego spending in that category or else borrow from another envelope.

For those who prefer not to use cash, this program can be adapted to involve debit card payments or checks.

Recommended: Savings Calculator

The Takeaway

Setting up a simple bill organization system can save you time, stress, as well as money, and can also make it easy to access records you need come tax time. Smart ways to organize your bills include creating a master list of all your monthly bills, deciding when autopay makes sense (and when it might not), and creating a virtual or actual filing system to track and streamline the bill paying process.

You might have to try a few different methods to figure out what works best for your situation. Another move that might help you get your finances organized is finding the right banking partner.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

FAQ

What bills are most important to pay?

While all bills are important to pay, basic living expenses (the things that keep you up and running, such as rent, utilities, and healthcare) and debt (student loan payments, for instance) can be priorities.

How do I organize my monthly expenses?

There are many ways to organize your monthly expenses, depending on your personal preferences and financial style. You might use an app or pencil and paper; you could try the envelope budgeting method or set up autopay. Many people try a couple of techniques before they land on one that suits them best.

How do you simplify bill payments?

Many people find that either using an app or automating their bills makes payment simpler. Your bank might offer a good app, or you can download one. And automating bill payments is something that vendors may set up for you or you can set up with your financial institution.

SoFi Checking and Savings is offered through SoFi Bank, N.A. Member FDIC. The SoFi® Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 12/23/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

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Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details at https://www.sofi.com/legal/banking-rate-sheet.
*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

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.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

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.

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 Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

SOBNK-Q225-016

A 401(k) loan allows you to borrow money from your retirement savings and pay it back to yourself over time, with interest. While this type of loan can provide quick access to cash at a relatively low cost, it comes with some downsides.

Read on to learn about borrowing against a 401(k), how 401(k) loans work, when it may be appropriate to borrow from your 401(k) — and when you might want to consider an alternative source of funding.

Can I Borrow From My 401(k)?

Borrowing from a 401(k) is possible under many 401(k) plans. In general, it’s wise to let your retirement savings stay invested so you’ll have that money for the future, but in some circumstances, borrowing against a 401(k) could make sense. For instance, if you find yourself in a situation where you need money immediately and have no other options, you may want to consider a 401(k) loan.

A 401(k) loan lets you borrow money from your retirement savings account and pay it back over time with interest. You’re essentially paying back yourself — the money you borrow against your 401(k) goes back into your 401(k) account with interest.

Not all 401(k) plans offer loans, so check with your plan administrator to find out if yours does.

What Is a 401(k) Loan & How Does It Work?

A 401(k) loan is a provision that allows participants in a 401(k) plan to borrow money from their own retirement savings. Here are some key points to understand about 401(k) loans.

Limits on How Much You Can Borrow

The Internal Revenue Service (IRS) sets limits on the maximum amount that can be borrowed from a 401(k) plan. Typically, you can borrow up to 50% of your account balance or $50,000, whichever is less, within a 12-month period.

Spousal Permission

Some plans may require borrowers to get the signed consent of their spouse before a 401(k) loan can be approved.

You Repay the Loan With Interest

Unlike a withdrawal, a 401(k) loan requires repayment. You typically repay the loan (plus interest) via regular payroll deductions, over a specified period, usually five years. These payments go into your own 401(k) account.

401(k) Loans vs. Early Withdrawals

When you withdraw money from your 401(k), these distributions generally count as taxable income. And, if you’re under the age of 59½, you typically also have to pay a 10% penalty on the amount withdrawn.

You may be able to avoid a withdrawal penalty, if you have a heavy and immediate financial need, such as:

•  Medical care expenses for you, your spouse, or children

•  Costs directly related to the purchase of your principal residence (excluding mortgage payments).

•  College tuition and related educational fees for the next 12 months for you, your spouse, or children.

•  Payments necessary to prevent eviction from your home or foreclosure

•  Funeral expenses

•  Certain expenses to repair damage to your principal residence

While the above scenarios can help you avoid a penalty, income taxes will still be due on the withdrawal. Also keep in mind that an early withdrawal involves permanently taking funds out of your retirement account, depleting your nest egg.

With a 401(k) loan, on the other hand, you borrow money from your retirement account and are obligated to repay it over a specified period. The loan, plus interest, is returned to your 401(k) account. But during the term of the loan the money you borrow won’t enjoy any potential growth.

Recommended: Can I Use My 401(k) to Buy a House?

Should You Borrow from Your 401(k)?

It depends. In some cases, borrowing against a 401(k) can make sense, while in others, it may not. Here’s a closer look.

When to Consider a 401(k) Loan

•   You’re in an emergency situation. If you’re facing a genuine financial emergency, such as medical expenses or imminent foreclosure, a 401(k) loan may provide a timely solution. It can help you address immediate needs without relying on more expensive forms of borrowing.

•   You have expensive debt. If you have high-interest credit card debt, borrowing from your 401(k) at a lower interest rate can potentially save you money and help you pay off your debt more efficiently.

When to Avoid a 401(k) Loan

•   You want to preserve your long-term financial health. Depending on the plan, you may not be able to contribute to your 401(k) for the duration of your loan. This can take away from your future financial security (you may also miss out on employer matches). In addition, money removed from your 401(k) will not be able to potentially grow or benefit from the effects of compound returns.

•   You may change jobs in the next several years. If you anticipate leaving your current employer in the near future, taking a 401(k) loan can have adverse consequences. Unpaid loan balances may become due upon separation, leading to potential tax implications and penalties.

Pros and Cons of Borrowing From Your 401(k)

Given the potential long-term cost of borrowing money from a bank — or taking out a high-interest payday loan or credit card advance — borrowing from your 401(k) can offer some real advantages. Just be sure to weigh the pros against the cons.

Pros

•   Efficiency: You can often obtain the funds you need more quickly when you borrow from your 401(k) versus other types of loans.

•   No credit check: There is no credit check or other underwriting process to qualify you as a borrower because you’re withdrawing your own money. Also, the loan is not listed on your credit report, so your credit won’t take a hit if you default.

•   Low fees: Typically, the cost to borrow money from your 401(k) is limited to a small loan origination fee. There are no early repayment penalties if you pay off the loan early.

•   You pay interest to yourself: With a 401(k) loan, you repay yourself, so interest is not lost to a lender.

Cons

•   Borrowing limits: Generally, you are only able to borrow up to 50% of your vested account balance or $50,000 — whichever is less.

•   Loss of potential growth: When you borrow from your 401(k), you specify the investment account(s) from which you want to borrow money, and those investments are liquidated for the duration of the loan. Therefore, you lose any positive earnings that would have been produced by those investments for the duration of the loan.

•   Default penalties: If you don’t or can’t repay the money you borrowed on time, the remaining balance would be treated as a 401(k) disbursement under IRS rules. This means you’ll owe taxes on the balance. And if you’re younger than 59 ½, you will likely also have to pay a 10% penalty.

•   Leaving your job: If you leave your current job, you may have to repay your loan in full in a very short time frame. If you’re unable to do that, you will face the default penalties outlined above.

Alternatives to Borrowing From Your 401(k)

Because borrowing from your 401(k) comes with some drawbacks, here’s a look at some other ways to access cash for a large or emergency expense.

Emergency fund: Establishing and maintaining an emergency fund (ideally, with at least three to six months’ worth of living expenses) can provide a financial safety net for unexpected expenses. Having a dedicated fund can reduce the need to tap into your retirement savings.

Home equity loans or lines of credit: If you own a home, leveraging the equity through a home equity loan or line of credit can provide a cost-effective method of accessing extra cash. Just keep in mind that these loans are secured by your home — should you run into trouble repaying the loan, you could potentially lose your house.

Negotiating with creditors: In cases of financial hardship, it can be worth reaching out to your creditors and explaining your situation. They might be willing to reduce your interest rates, offer a payment plan, or find another way to make your debt more manageable.

Personal Loans: Personal loans are available from online lenders, local banks, and credit unions and can be used for virtually any purpose. These loans are typically unsecured (meaning no collateral is required) and come with fixed interest rates and set terms. Depending on your lender, you may be able to get funding within a day or so.

The Takeaway

Borrowing against your 401(k) can provide short-term financial relief but there are some downsides to consider, such as borrowing limits, potential loss of growth, and penalties for defaulting.

It’s a good idea to carefully weigh the pros and cons before you take out a 401(k) loan. You may also want to consider alternatives, such as using non-retirement savings like an emergency fund or taking out a personal loan or a home equity loan or line of credit.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.

FAQ

What is a 401(k) loan?

A 401(k) loan allows you to borrow money up to a certain amount from your retirement savings account and pay it back over time with interest. The money you repay goes back into your 401(k) account.

How do 401(k) loans work?

A 401(k) loan allows you to borrow money from your 401(k) account. Not every plan allows 401(k) loans, but many do. There are limits on how much you can borrow — generally up to 50% of your account balance or $50,000, whichever is less, within a 12-month period. In addition, you may have to get your spouse’s permission to take out a 401(k) loan, and you need to repay the amount you borrowed with interest typically within five years.

When should I consider taking a 401(k) loan?

It’s generally best not to touch money in a retirement savings account if possible so it can potentially keep growing for your future. However, in some situations it may make sense to take out a 401(k) loan — for instance, if you’re facing an immediate medical emergency or you’re trying to pay off extensive high-interest debt, such as credit card debt. If you have no other financial options, a 401(k) loan might be something to consider.

How do 401(k) loans differ from early 401(k) withdrawals?

With a 401(k) loan, you borrow money from your retirement account and must repay it over a specified period, typically within five years. The loan, plus interest, is repaid to your 401(k) account. An early 401(k) withdrawal, on the other hand, is when you withdraw money from your 401(k) before age 59½. These distributions generally count as taxable income. And because you’re under the age the IRS specifies for qualified retirement withdrawals, you typically will also have to pay a 10% penalty on the amount you took out.

There are some possible exceptions to the early withdrawal penalty. If you have a heavy and immediate financial need, such as medical expenses, for example, you may be able to avoid the 10% penalty on an early 401(k) withdrawal.

What are some alternatives to borrowing from my 401(k)?

Alternatives to borrowing from your 401(k) include taking the money from an emergency savings fund, taking out a home equity loan if you have equity in your house, taking out a personal loan, or negotiating with your creditors to see if they might be willing to put you on a payment plan.

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SOPL-Q225-001

A statement credit is money that gets credited to your credit card account, reducing the amount you owe. It can be earned through various means, including returns, price adjustments, reward redemptions, or sign-up bonuses. Put simply, it’s the opposite of a charge to your account. It lowers your balance instead of increasing it.

Knowing how you earned that reduction in your debt can help you take advantage of your credit card’s rewards system in the future.

What Is a Statement Credit?

Credit card companies use a statement credit to issue a credit to your accounts, such as cash back or other rewards you have earned. Essentially, you receive money from your card issuer for a specific reason.

Finding documentation of your statement credit varies among credit card companies. Generally, though, you will see it on your monthly statement under transactions or account activity.

If you check your statements online, you’ll probably see the credit appear in green text and contribute to the statement balance.

Regardless of the format, a statement credit has a minus sign in front of the cash amount, thus decreasing your revolving balance.

How to Receive Statement Credits

There are a few ways a statement credit might apply to your account. A common reason is through a return.

If you have ever returned an item you bought using your credit card, the retailer will probably refund the money borrowed from your card issuer. You’ll receive a statement credit that matches the price of the returned item.

Other than returns, ways you may receive a statement credit include:

•   Shopping benefits. Some card providers offer discounts or statement credits for shopping with specific merchants.

•   Travel credits. Card providers may offer annual statement credits to pay for eligible travel expenses like a luggage fee or plane tickets.

•   Rewards. Among the different types of credit cards are rewards options. Card providers that offer cash back, points, or miles may let you redeem them in the form of a statement credit.

Statement Credits vs. Cash Back

Your credit card company gives you options when you sign up for a rewards credit card. One choice may be cash back or statement credits.

Cash back sounds simple enough, but it doesn’t always mean you’ll get direct money. Instead, your issuer may offer a cash reward in the form of a credit put on your account. Occasionally, they may send you a physical check or deposit the money in your checking account.

You earn cash back as a reward for using the credit card. It is a percentage of the money spent on purchases using the card.

In comparison, a statement credit reduces your credit card balance. Carrying a high balance between periods could lead to a high credit utilization ratio, which shows the amount of available credit a person has. That can result in a lower credit score over time.

Are Statement Credits Taxable?

The type of credit or reward you receive determines whether it’s taxable. If the credit card holder spent money to earn the reward, they usually don’t have to pay taxes on it. If they receive the credit without any spending, the reward may be taxable.

For example, an individual receives money back on her account after returning a chair she purchased online. That credited amount would not be taxable.

Cashback earners who engage in programs for points, like travel rewards, also generally avoid taxation.

The primary instance where cardholders face a taxable reward is with sign-up bonuses.

If they did not have to purchase anything to earn the bonus, it’s probably taxable. The taxation may apply regardless of how the credit card company issues the bonus, whether it’s in cash or airline miles.

Using Your Rewards Wisely

Credit cards have their perks, but it’s smart to use the credit card responsibly and the rewards wisely.

Consider using statement credits put on your account to lessen your balance (but keep in mind that statement credits aren’t usually considered the same as making a payment to your account, even though both lower the amount owed). Or look into the various rewards your card issuer offers.

When shopping for a new card, you may want to look closely at the points, cash back, or miles involved. For instance, how are the rewards offered, how are they redeemed, is it better for you to get a card with consistent points across all purchases or increased rewards in certain areas?

Think through which rewards best fit your lifestyle and interests. If you want to see the world, you may want to get a card that optimizes travel benefits. Trying to pay down your debt? Cash back applied to your balance could be the way to go.

Recommended: Understanding Purchase Interest Charges on Credit Cards

The Takeaway

A statement credit is a reduction in a credit card balance. It could result from an item you returned or from the redemption of travel points, cash back, or other rewards. It’s important to note that some kinds of statement credits, such as a sign-up bonus, could be taxable.

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 credit card statement credits work?

Statement credits are a way that you get money credited back to your account. They can lower your balance and may reflect an item that was returned, cash back or other credit card rewards, or the application of a sign-up bonus.

What does an offer for a $400 statement credit mean?

Typically, once you spend the amount required to qualify for a statement credit, the amount is tallied against your balance. So if your balance was was $1,000 and you had a $400 credit, that means you’d now have a balance of $600. Note, though, that this usually doesn’t count as a payment to your account. You should still go ahead and pay at least the minimum owed.

Is a statement balance what you owe?

Your credit card statement balance shows what you owe at the end of a given billing cycle, which is typically between 28 and 31 days long. The balance reflects purchases, fees, interest, and any unpaid balances, with payments or credits deducted, too.

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.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

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 .

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.

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

If you’re not a seasoned credit card user, you might have questions about credit card payments and their impact on your credit.

Used smartly, a credit card can be a great financial tool, but the key is not charging more than you can afford to pay back and making payments on time each month. Here, you’ll learn more about how to manage your credit card payments well which can help optimize your finances.

The Benefits of Using a Credit Card

A credit card is convenient if you don’t have cash on hand to make a purchase. As long as you know you can pay back what you charge, either in full or over a few months, a credit card can be a useful tool.

There may also be situations like renting a car or booking a hotel room when you are typically required to have a credit card to avoid a deposit. The hotel or rental company will place a hold on your card so that in the event of damage or other expenses you need to cover, the company knows you can pay them. With a debit card, you may have that same hold of several hundred dollars tying up your funds for several days.

Another benefit of credit cards is the ability to earn rewards. Many cards give you points for purchases that you can redeem for travel, cash back, or other perks, and if you pay your balance before accruing interest, it can be like the card is paying you to use it.

Potential Downsides of Using a Credit Card

On the other hand, credit cards can cause issues if you don’t exercise good behavior in terms of your credit card payments. Each month, you are charged interest on your purchases. The interest is calculated by dividing your card’s annual percentage rate by 365 to get the daily rate, and then multiplying your current balance by the daily rate.

That may only amount to a few extra dollars a month, but if you don’t pay your balance in full for several months, that amount can snowball, and what you initially charged can easily cost you a lot more.

Another thing to be aware of is the fact that credit card companies charge fees in addition to interest. Some charge an annual fee (usually for cards with rewards programs).

Cash advances come with a fee and a higher interest rate than for purchases.

There are also late credit card payment fees to watch out for. Not only will you be charged a fee if you don’t pay the minimum due by the payment due date, but it may appear on your credit report as a negative mark. This may hurt your credit scores and your ability to take out other financing later.

How Credit Cards Impact Your Credit Scores

While a late payment can negatively affect your credit scores, credit card payments made on time can actually help your credit scores.

Each time you make a payment on time, it is reported to credit bureaus like Experian®, Equifax®, and TransUnion®. Over time, on-time payments may factor into the algorithms the credit bureaus use to determine your credit scores, and may build your number a few points.

Each bureau has its own formula for how scores are determined, and not every credit card company reports to each bureau, so there’s no easy way to know how your payments directly affect your score. But in general, paying on time is behavior that will benefit you over time.

Understanding Credit Utilization

Another factor that goes into your credit scores is credit utilization. This is a calculation of how much credit you have available to access compared with how much you are actually using.

Let’s say you have three credit cards and a total available credit of $15,000. You have a balance of $2,000 across all of them. By dividing the balance by the total credit available, you get 0.133, or 13% credit utilization.

When applying for new credit cards or loans, lenders will look at your credit utilization. If it’s too high — most look for a rate of under 30% or under 10% ideally — you may not be approved for the card or loan. That’s why it’s important to stay on top of how much of your total credit you’re using and pay down your debt so you don’t have a high credit utilization rate.

Recommended: Breaking Down the Different Types of Credit Cards

How to Build Your Credit With a Credit Card

Once you understand how credit card payments work, you may use credit cards to build your credit.

1. Pay Your Bill on Time Each Month

You’ve learned the importance of making your credit card payments on time. For some people, it can be helpful to put the credit card due date on a calendar (leaving a few days for the payment to get to the company and be processed) to ensure they don’t have late payments.

Many people find autopay, used wisely, a great tool.

If you’ve just received your first credit card, find out how to make credit card payments long before your first one is due, as you might need to set up your bank account information to send an electronic payment, and you want to allow time for that process to be finalized before the due date.

2. Pay More Than the Minimum

If you only charge what you can afford, you should be able to pay off your balance each month, but there may come a time when you have an emergency that requires a larger charge you can’t pay off all at once.

In that case, you may be tempted to pay the minimum amount due, but realize that in doing so, you will pay more in the long run, as those interest charges will snowball. Even if you pay just $5 a month more than the minimum due, you can cut down on interest and pay off your balance faster.

This will also reduce your credit utilization rate and may build your credit score.

3. Review Your Credit Report Regularly

Working on your credit involves more than just making credit card payments on time. Access your credit report from Equifax, Experian, and TransUnion (it’s typically free to do so) and review it for accuracy. Make sure the payments you’ve made are reported as on-time, and look at your list of trade accounts to make sure there are no errors.

For example, maybe you closed a credit card six months ago, but it still appears on your credit report. This is a discrepancy that you can report to the bureau (each bureau’s website has information on how to report a discrepancy). Check again after you report it (allowing for time to process your request) to ensure it has been removed.

Regularly reviewing your credit report will also alert you to any fraudulent activity that might occur. It’s rare, but identity theft does happen, and you’ll want to know if someone is using your identity to open credit cards or take out loans.

4. Only Charge What You Can Afford

Credit cards can be tempting. Without discipline, you might feel like taking a shopping spree, ignoring the financial consequences.

As mentioned in terms of using a credit card responsibly, only charge what you can afford to pay back in a reasonable time frame. A credit card isn’t meant to be free money, and overspending with one can cost you much more than you initially spent.

The Takeaway

Using credit cards responsibly and making credit card payments on time (and in full, when you can) can set you on the path to financial success. The key is to be aware of your spending and your credit utilization so you can help build your credit scores over time.

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 credit card monthly payments work?

Credit card monthly payments involve paying at least the minimum amount due to avoid late fees and keep your account in good standing. Paying off the full statement balance avoids interest charges.

Do you pay your credit card in full every month?

Credit cards don’t need to be paid in full every month, but doing so prevents interest charges and debt from accumulating. Even so, carrying a balance with interest can be an effective way to finance major purchases, like a kitchen renovation or a significant car repair.

How are credit card payments worked out?

Credit card minimum payments are usually calculated as a percentage of your statement balance. Some lenders may charge a percentage of your balance, while others factor in interest and other fees. You can check the fine print or contact your card issuer for details.

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.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

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.

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

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Large trees, even landmark ones, sometimes have to be removed when they’re dead, dying, or growing too close to other structures. How much it costs to cut down a tree varies depending on where you live, the tree’s height and diameter, how accessible it is, and other factors. On average, you can expect to pay $750 to remove a tree.

While tree removal is costly, it’s often better to spend the money up front rather than risk a tree falling and causing injury or damage to nearby property. Keep reading to find out what tree removal costs and the complications that may drive up your price.

Average Tree Removal Cost

Removing a tree can range anywhere from $150 to $2,000, with the average landing at $750, according to Angi. Shorter trees will come in on the low end of the range, while larger trees can run between $800 to $2,000. A tall, hard-to-access tree can cost even more — as much as $10,000.

If you have multiple trees to remove, the costs can really add up. While many people throw it on a credit card, that can be an expensive solution. If you need financing, you might consider getting a home equity line of credit (HELOC), which allows you to borrow against the equity in your home as you need it.

Another option is to take out a personal loan for home improvement. These loans don’t require equity in your home or collateral, and many lenders offer same- or next-day funding. However, rates can be higher than home equity options.

Cost of Tree Removal by Type

A tree’s size generally impacts cost more than type. However, some species of trees are not as dense or as compact as others, making them easier (and less expensive) to remove. Determining the type of tree you need to have removed can also give you an idea of its height at maturity and provide insight into potential costs. Here’s a look at costs based on tree type.

Recommended: Typical Landscaping Costs

Factors That Affect Tree Removal Cost

The cost of tree removal typically includes cutting down the tree, cutting it into pieces, and removing the debris. How complicated and time-consuming this process will be determines the price.

To find the right contractor, you may want to call multiple tree removal services and compare quotes on the project. Make sure to ask what exactly their price includes and what extra services or fees may come up.

Here’s a look at some key factors that can affect your tree removal quote.

Size of the Tree

Generally the larger the tree, the higher the cost. Price can make a particularly big jump when a tree exceeds 80 feet tall. At this point, the removal company will need a crane to access the highest branches, along with additional staff to work the machine. This can add as much as $500 to the job.

Here’s a look at tree removal price by tree size:

A Tree That Has Already Fallen

Generally, a fallen tree will cost considerably less to remove than one that’s still standing, since the team doesn’t need to do any climbing or careful cutting. It’s just a matter of cutting it up, then removing the debris. You can expect to pay just $75 to $150 to remove a fallen tree.

That said, you generally don’t want to let a dying tree get to the point of falling, as it can do damage to nearby property and/or harm someone standing nearby.

Accessibility

If the tree you need to have removed is in a hard-to-reach or unsafe area, it can make the job harder for the team. This can add 25% to 50% to the total cost of removal. For example, a tree that has heavy branches near your home or is close to the local power lines takes more time and care to remove. A tree that is hard to get to due to obstacles can also be more costly. If possible, consider taking down fences or other structures in the way to reduce costs.

Number of Trees Needing Removal

The more trees you need to have removed, generally the higher the cost. However, you’ll typically save on the cost per tree, since the workers and equipment are already on your property. When multiple trees need to come down, some companies will charge by the acre instead of by specific tree count. Depending on how many trees cover the area, this can cost anywhere from $500 to $6,000 per acre.

Emergency Tree Removal

If a storm has caused a tree to lean perilously close to your home, you’ll want to bring in a tree removal company as soon as possible. Emergency tree removal generally costs more than standard tree removal, particularly after a storm, when these services are in high demand. A particularly urgent tree situation could run as high as $5,000.

Your homeowners insurance may cover the cost of tree removal relating to storm damage, so it’s worth checking your policy or calling them to find out. If a tree has already landed on your home or car, you may want to reach out to your insurer before getting it removed, since they may need to send an agent to assess the situation.

Cleanup and Debris Removal

Another factor that can impact the cost of tree removal is how you choose to handle the debris and stump. Options for debris removal typically include hauling away the tree (which runs around $70), putting it through a chipper so you can use it as mulch (on average, $95), or splitting it into firewood for your home (around $70).

If you don’t want to be left with a stump, the company will typically grind it up using a specialized stump grinder. The cost is around $100 to $150 for the first stump, and $50 for each additional stump.

Recommended: Five Curb Appeal Ideas for Your House

How to Determine If a Tree Should Be Removed

The biggest danger unhealthy trees pose is falling — onto people, homes, cars, or power lines. But even a healthy tree may need to be removed if it’s growing too close to a house or electrical wires. If you’re considering putting your home on the market, removing a threatening tree can give potential buyers one less thing to worry about.

Here are some telltale signs you might have to remove a tree:

•   It’s no longer growing leaves

•   Branches drop randomly (not related to high winds or storms)

•   It’s been significantly damaged by a storm

•   It has dead or dying branches

•   It’s growing too close to your home or other structures

•   The trunk is rotten and hollow

Generally, the first step is to hire a professional arborist to give you an opinion on your tree’s health. Some conditions may look concerning but not necessarily be damaging to the tree. Also, many cities require an arborist’s evaluation before you’re allowed to remove a tree.

Recommended: Top Home Improvements That Increase Your Home’s Value

How Much Does DIY Tree Removal Cost?

Tree removal can be dangerous and is generally best left to the professionals. If you have the experience and skills to do a DIY tree removal, however, you may be able to save some money. You’ll need several items for safety, including gloves, protective goggles, steel-toed boots, a hard hat, chainsaw chaps, and earplugs, which can run $200 to $300. In addition, you’ll need a chainsaw (which can run $50 to $150) and felling wedges (around $20 for six).

If you don’t have the necessary gear, you can expect to invest anywhere from $260 to $470 for a DIY tree removal. However, the risk involved may not be worth the cost savings. Tree removal professionals have access to tools and equipment that make the job significantly safer, including tree-rigging ropes, blocks and pulleys, hooks, ladders, lowering devices, and specialized saws.

The Takeaway

On average, homeowners pay $750 for a single tree removal. Your price will vary depending on the size of the tree, its accessibility, how many trees you’re getting removed, and what you want to do with the debris and stump.

A good first step is to hire an arborist to evaluate your trees and make an informed recommendation about how to manage any risk. If you learn that one or more of your trees needs to come down, it’s a good idea to get quotes from at least three tree removal companies. Generally, attempting DIY tree removal is not a good idea.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.

About the author

Julia Califano

Julia Califano is an award-winning journalist who covers banking, small business, personal loans, student loans, and other money issues for SoFi. She has over 20 years of experience writing about personal finance and lifestyle topics. Read full bio.

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SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

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