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I read on this website the following:

Maximize Your Statement Cycle

The smartest way to use your credit card is to be sure to pay your balances in full and on time. However, you can actually take this to the next level and extend your interest-free time.

Any charge made the day before your statement closes will be due 20-25 days later. But if you make that same charge the day after your statement closes, then you have another extra 30 days to pay it without incurring interest. This means you can get an interest-free period of up to 55 days!

Can someone provide some more explanation on how is this possible and provide a clear example? Is this generally applicable or it works only on some banks/credit cards?

Thanks.

  • I think a simple swimlane calendar chart would illustrate the trick. – jldugger Dec 11 '11 at 1:08
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    Well, there's one web site to avoid, then. – Chelonian Dec 11 '11 at 4:28
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    Instead of spending time on a trick like this, you can probably do some productive work for half that much time and get twice the return. – xpda Dec 11 '11 at 5:41
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Well, I answered a very similar question "Credit card payment date" where I showed that for a normal cycle, the average charge isn't due for 40 days. The range is 35-55, so if you want to feel good about the float just charge everything the day after the cycle closes, and nothing else the rest of the month. Why is this so interesting? It's no trick, and no secret.

By the way, this isn't likely to be of any use when you're buying gas, groceries, or normal purchases. But, I suppose if you have a large purchase, say a big TV, $3000, this will buy you extra time to pay. It would be remiss of me to not clearly state that anyone who needs to take advantage of this "trick" is the same person who probably shouldn't use credit cards at all. Those who use cards are best served by charging what they can afford to pay at that moment and not base today's charges on what paychecks will come in by the due date of the credit card bill.

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    I like your disclaimer! In my opinion, a credit card shouldn't be used for credit. Sounds stupid, but really the only reason I have a cc is so I can buy stuff from online retailers that won't accept anything else. – Lagerbaer Dec 11 '11 at 3:42
  • +1 for the disclaimer. For a large business, a couple weeks extra float makes sense. For a consumer, if you can't make your payments, don't buy it. – Fomite Dec 12 '11 at 2:44
  • Thanks, and agreed. I'm old enough to remember 12% CDs, so when money cost over 1% per month, I'd see how this adds up, but today, not so much. – JTP - Apologise to Monica Dec 12 '11 at 4:40
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There are always little tricks you can play with your credit card.

For example, the due date of your statement balance is not really set in stone as your bank would like you to believe. Banks have a TOS where they can make you liable to pay interest from the statement generation date (which is a good 25 days before your due date) on your balance, if you don't pay off your balance by your due date.

However, you can choose to not pay your balance by your due date upto 30 days and they will not report your late payment to credit agencies.

If they ask you to pay interest, you can negotiate yourself out of it as well (although not sure if it will work every-time if you make it a habit!)

Be careful though: not all banks report your credit utilization based on your statement balance!

DCU for example, reports your credit utilization based on your end-of-the-month balance.

This can affect your short term credit score (history?) and mess around with your chances of pulling off these tricks with the bank CSRs.

These "little tricks" can effectively net you more than 60 days of interest free loans, but I am not sure if anyone will condone this as a habit, especially on this website :-)

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    Uh, right. As I said in my own response, the target audience for such advice is one who is such bad shape they should re-evaluate their spending habits. – JTP - Apologise to Monica Dec 10 '11 at 22:06
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    I wouldn't count on banks waving late fees and interest too much, definitely not if its a habit. May work once or twice, and never again. Relying on that will cost you much more than the interest you were trying to save. – littleadv Dec 11 '11 at 1:08
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    Describing such activity as "tricks" puts a falsely positive spin on poor financial behavior by the card holder. Better to describe them as "acts of the desperate who don't know how to manage their finances." – gef05 Dec 11 '11 at 15:00
  • Haha. I agree these do not make much financial sense for people earning a steady income, but when I was starting out as a student with no income and only expenses, 60 days to pay off the microwave and fridge did make a difference. Now, the hassle would not be worth it. – f1StudentInUS Dec 11 '11 at 20:23
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I think this stuff was more valid when grace periods were longer. For example, back in the 90's, I had an MBNA card with a 35 day grace period. Many business travellers used Diner's Club charge cards because they featured a 60 day grace period.

There are valid uses for this:

  • If you travel or otherwise incur expenses for your employer, it gives you time to get a reimbursement check.
  • If you bought Christmas presents, you could time it so that your end of year bonus or maybe a tax refund came in when the bill was due.
  • When I was in college, I would buy books with this card so that my commission check from summer work (which lagged 45 days) would arrive.

As JoeTaxpayer stated, if you are benefiting from "tricks" like this, you probably have other problems that you probably ought to deal with.

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