Short answer: if your due date falls before your pay arrives, ask the lender whether it will move it. The CFPB lists a due date change as an option when you are current but your pay date no longer lines up with the bill. On most loans interest builds daily, so the interest you owe between payments changes when the date moves (CFPB). Moving it later usually costs a little interest once; moving it sooner saves a little.
How the shift changes the interest
On a simple interest loan, interest builds every day on the balance and is worked out each time you pay (CFPB). When the due date moves, the gap between two payments gets longer or shorter for one cycle. More days means more interest in that payment, so less of it goes to the balance; fewer days means the reverse. After that, payments fall back to roughly a month apart.
Worked example
Example only, our calculation: a $4,000 balance at 18% APR and a $200.00 payment, last paid on November 1. Daily interest is about $1.97 (balance x APR / 365). The table shows the next payment under each choice.
| Choice | Next due date | Days since last payment | Interest in that payment | Goes to the balance | Interest vs current date |
|---|---|---|---|---|---|
| Keep the current date | December 1 | 30 | $59.18 | $140.82 | None |
| Move it later | December 15 | 44 | $86.79 | $113.21 | +$27.61 |
| Move it sooner | November 20 | 19 | $37.48 | $162.52 | -$21.70 |
Moving the date two weeks later costs about $27.61 in extra interest, once. The balance is that much higher afterwards, so a few cents more interest follow on later payments. A late fee, or a late mark on your credit report, can cost more; what a missed payment leads to is covered in what happens if you miss a loan payment. Your lender may count days differently or charge a fee for the change, so ask.
Picking the new date
- Choose a date a few days after a payday, so the deposit has cleared before the payment is pulled or sent.
- If you are paid every two weeks, check the months with two paydays close together and the months where the gap is longest; plan for the longest gap.
- If an automatic payment is set up, ask the lender to move the debit date too, and check the first statement after the change.
- If several bills are due near the same time, spread them across your paydays.
Get it in writing
- The new due date, and the date the change starts.
- The amount of the first payment after the change, and how much of it is interest.
- Any fee for the change.
- That the payment under the old date will not be treated as late while the change takes effect.
- Whether the final payment date or amount changes.
Get the name of the person you spoke with, as the CFPB suggests for any change you agree with a lender (CFPB). If you need to skip a payment rather than move it, that is a different agreement with a different cost; see skip-a-payment and deferral offers.
Credit cards work differently
A credit card's due date must fall on one fixed day of the month in every billing cycle (12 CFR 1026.7(b)(11)), and if the issuer does not accept mail payments on the due date, a mailed payment that arrives the next business day it does accept them cannot be treated as late (12 CFR 1026.10(d)). You can ask your issuer whether it will set a different day.
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Disclosure: Modern Lending Solutions is not a lender, loan broker or agent for any lender or loan broker, and does not make credit decisions. Any compensation we receive is paid by participating lenders, only for advertising services. This guide is general information, not financial or legal advice.
Sources
- CFPB blog: Worried about making your auto loan payments? Your lender may have options that can help (February 2020, archived)
- Regulation Z, 12 CFR 1026.7(b)(11): credit card due date must fall on one fixed day of the month
- Regulation Z, 12 CFR 1026.10(d): payments due on a day the creditor does not accept mail payments