Credit Help and Tips

Make Large Purchases Early in Your Billing Cycle

If you generally pay off your entire credit card balance each month, but often have a tough time doing so, you may want to think about timing your credit card purchases.

Credit cards have billing cycles, typically 30 days or roughly one calendar month. All purchases made during a billing cycle are due within a couple of weeks after the billing cycle closing date.

For example, a credit card may have a billing cycle from May 14 to June 14, and any purchases made during that time must be paid by the due date which will be included in your monthly statement, typically 2-3 weeks after the closing date.

If you do not pay the balance in full within the credit card grace period, you will be slapped with a finance charge based on the interest rate and type of APR computation for the remainder that is not paid.

This is where the timing of your purchases comes in handy. Say you have a balance of $1,000 on your credit card, and your closing date is coming up in two days. You also have your eye on that new plasma screen, but it’s another $2,000, and you only have $2,000 available to pay your credit card bill.

At the same time, you know that in a month you’ll have another $2,000 available to pay off your credit card once you receive your next paycheck.

Instead of buying the plasma screen within the next two days, wait until your next billing cycle begins to make the plasma screen purchase. That way the purchase will be deferred to the next billing cycle, and the payment due date will subsequently be pushed back another 45-60 days.

Think of it as stretching your dollar a little, and avoiding costly interest charges, especially if you live month-to-month like so many people do these days.

The only downside to delaying purchases is if there’s a sale or you’re simply too impatient to wait until your billing cycle closes each month. And if the purchase is an emergency or out of necessity.

Note that if you carry a 0% APR credit card, there’s no need to delay purchases as finance charges aren’t issued during the introductory period.

Also consider a balance transfer if you have a lot of debt on a high-APR credit card that simply can’t be paid off in full.

By Colin Robertson

Colin created this blog after spending several years in a job that required him to scour credit reports on a daily basis. His goal is to help individuals better understand their credit and get the most out of credit cards.

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