November 8, 2007
A way to pay credit cards less money
Don’t be misled by the title, I am current on all my credit card accounts. I also encourage paying beyond the minimum payment on credit cards, of course focusing more effort on the one you want to rid your life of faster. Last night I was crunching the numbers on some of my cards and noticed differences in the balances based on the day I made a payment to the account. This gave me an idea on how to save a little extra each month.
If you carry a balance on a credit card, you’re going to pay interest at the APR of that card. When you make a payment before or on the due date, the balance on the card is less than it was before you made the payment. I usually just make payments at regular points in the month because that’s the system that I structured. This usually means I make a payment to an account a little before the actual due date. I realized I have been focusing on the wrong date.
Every time a bill is generated with all of the previous month’s details, it has a billing date, minimum payment amount, and a due date. Instead of focusing on making sure I make a payment before that due date, I should be making a payment on the billing date to lower that balance as soon as the bill is generated. This would save about 30 days of interest every month. Although it is not much of a difference it would add up in the long run.
So I’m calling all my credit card companies and trying to get some dates shifted around for me so that the billing date is at the date I make payments to the accounts. This will also take some careful planning because I’ll probably have to make two payments within one month in order to pull this off and stay in front of them.
I’m still working on the 0% balance transfer card and thinking about transferring balances from two cards over to that, so I can pay both off at once at 0% interest in 12 months. I’m going to probably transfer $1800 even so that 12 payments of $150 will eliminate that debt once and for all. Transferring credit card debt does not pay it off, it just moves to a place that makes it easier to pay it faster. Hopefully I will have an update on how this is going at the end of the month.
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