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.
Allow me to explain. Credit cards have billing cycles, typically 30 days or roughly one calendar month.
All purchases made during a given 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 14th to June 14th, and any purchases made during that time must be paid by the due date ,which will be included in your monthly statement.
This due date is typically three weeks, or 21 days 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.
How to Time Your Purchases with Credit Cards
- If you want to make a big purchase but avoid having to pay it back for a while
- Try to time the purchase so it falls early on in your credit card billing cycle
- This could give you an additional 50 days of payment relief
- And save you money on interest if you’re unable to pay it all off in full
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 laptop, 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 laptop within the next two days, wait until your next billing cycle begins to make the purchase.
That way the major purchase will be deferred to the next billing cycle, and the payment due date will subsequently be pushed back another 50 days or so.
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 obviously if the purchase is an emergency or out of necessity. In these cases, you probably can’t mess around.
If You Have Multiple Credit Cards There’s Another Trick
- Those with multiple credit cards can space out their purchases based on the closing date
- So if one card’s billing cycle just began you can put a big purchase on it
- Then you won’t have to pay it off for another 45 days or so (remaining billing cycle + payment grace period)
- Take note of all your billing periods so you know which affords you the most time
If you happen to have two or more credit cards in your wallet, there’s another trick you can employ as well.
Simply make the large purchase on the card with the billing cycle that has just begun.
That way you’ll have nearly an entire billing cycle (roughly a month) plus the payment grace period (another 21 days).
Altogether, you could be looking at 50 days until the payment is actually due.
I’ll sometimes do this for a large utility bill like my electric/water just because I don’t want to make the huge payment anytime soon.
While I still have to pay it, I can at least delay it! That money can be put to use elsewhere in the meantime.
But for those who really do need to delay it, this trick can be a real lifesaver, and it won’t cost you any additional interest as long as you make your full credit card payment each month by its due date.
What About a 0% APR Credit Card?
Lastly, 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.
However, you will eventually need to pay off the purchases, so try to control yourself.
Another thing you can do if you’re having difficulty paying off your balances in full is to consider a balance transfer .
If you have a lot of outstanding debt on a high-APR credit card (or two) that simply can’t be paid off in full, it might be possible to shuffle it to a 0% APR card.
You’ll pay no interest during the promotional period and only a minimum payment will be due.
But perhaps a better strategy would be to pay off the balance by the end of the promotional period since every dollar will go toward the purchases (as opposed to interest).