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.
Thanks for the info. I’ll take a look at my cards to see if this is true for me. Every penny counts when you’re trying to become debt free.
This is correct Jim! Check out the blog I did on this topic back in March:
Pay Right Away
Well blogging about doing something and actually doing it are two different things. Have you actually been doing this and are you seeing a difference? In all reality the amount of difference it makes is very small, but paying off debt even slightly faster is better in the long run. It’s too bad these companies don’t give you more of a benefit if you pay them early since they charge you huge late fees if you’re even a second past the due date and time.
No kidding that blogging about it is different than actually doing it.
I don’t know why you felt you had to put that in there since, well, you are blogging about it but not actually doing it right now. :p
So, yes prior to being in debt I paid all my bills the day I received them/got notification of the bill. I never waited to pay the bill until the due date. When I got further in debt and wasn’t able to do that as easily I lapsed. If I get the bill and I’m able to make the payment before it’s due, I pay it asap. So yes, I currently do this. Also, with my new method of paying all my credit card bills with my first paycheck of the month (the day I get paid)which I started this month I will be doing this automatically.
As to whether or not I’ve noticed a different - I’ve never sat down and compared specifically, I just trust the formula that shows it is saving me money.
Keep surfing those balances to 0% for twelve months!!! Before you know it, you will be debt free!
Dig the blog a LOT!
Nice style and I like the way you discuss the tracks. I’m going to book mark it.