Dumb credit card question

When everyone says clear your credit card balance every month end, do they mean on the last day of the month or the last day when payment is due for the last cycle? I started a new budget on 25th of last month as i was new to the program but I messed up something so I cleared all my credit cards and started fresh today but want to know what others mean when they say pay it off at the end of the month.

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  • Everyone doesn't say to clear your credit card balance every month end. Paying earlier than the due date cheats you out of interest and cannot be automated, thereby increasing the chance of error.

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  • What people might be alluding to is that you should have the credit card category allocated to cover the spending before month end (as in, in the same month in which the credit card spending occurred) so that when the bill arrives, you have the money ready to send to the payment. If you spend money on a credit card without there either a) being enough money in the category to cover it or b) you moving money into the category to cover it, you will have created new debt which for most of us is a no no!

    Obviously sometimes this isn't possible, but in that instance, you have in fact created new debt that future you (in a future month) is going to have to pay for. 😥

    Actually sending the payment is slightly different is going to depend on your bank/credit card company's billing cycle. But! When the bill does come, if you've budgeted correctly, you'll be ready to pay it! Even if it rolls the payment over to the following month.

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  • Sarah said:
    you should have the credit card category allocated to cover the spending before month end

    That may indeed be what some people mean.

    Ideally though, you should have money in the spending category before the purchase. In other words, reallocate if necessary to avoid overspending -- that way it's not too late to skip the purchase if you don't like the consequences of that reallocation. The CC Payment category will take care of itself.

    Second priority would be to cover overspending (in that category) before the month ends with newly arrived income. The CC Payment category takes care of itself.

    Third priority would be to budget toward the CC Payment category directly in a month later than the overspending. 

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