Paying CC off in full mid month
I'm curious to see what other YNABers do. If I pay my cc off in full on the 15th of February. Then I've put other charges on it between Feb 15-28. Do you make another payment at month end to clear that balance? Or do you let the funds to be paid rollover to March then pay the cc when it will be due?
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Hi - if you only charge your CC from your available budget (cash account) then it doesn’t matter when you pay it down. I typically pay my CC down as soon as the charges post which ends up being multiple times per week. In fact the only reason I still use my credits cards is for the rewards they offer. Not sure if that entirely answers your question.
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Matt T That is how I pay mine as well, I like to think of them as debit cards with added protection and rewards, sort of the best of both worlds, being a cash/debit sort of spender with perks.
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Matt T I do this too. I pay as soon as I can after a charge posts. Since I often have several charges in a week, I'll sometimes wait a week or two, but I pay early and often.
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Most people pay the statement balance on or slightly before the due date. This has the advantage that it can be automated. It also earns extra interest compared to paying the account down to $0. Free money for zero work? Count me in!
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No need to clear the balance at month end. Pay statement balance near the due date. Make sure your available to pay matches the card balance in ynab and then you are free to pay when you feel like it but generally no reason to pay until its due.
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My payments are all automated as well and paid on the due date. Saves time and like dakinemaui said, the money earns interest while it waits to pay the CC.
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My CC is due the 22nd each month.
I typically pay within the first week of every month (after the previous month charges have cleared) so I am always paid up in full of the previous month.-
Jeff Reetz Why?
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Superbone
For me, it’s just a good demarcation point. Kinda closes the previous months charges and easy to see everything line up appropriately.
plus, with this habit, I won’t forget to pay by the due date, gives me a couple weeks in case I do get side tracked. I’ve come close a couple times to missing the due date. -
Jeff Reetz Have you thought about automating payment? I’ve been doing this for a number of years now and it all but guarantees that you won’t ever miss a payment. The one thing to keep in mind is to always make sure you have enough funds in your payment account to cover it. Many of us do this with the help of scheduled transactions. We’re able to look forward in time and make sure we always have enough funds to cover all bills.
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Superbone
yes. And this would work well. Bit I still like the demarcation point at the month and having previous month completely paid off.
This way I’m still keeping money in the bank for that 30 days to gain the little extra interest -
Jeff Reetz Most cards give you control of when the automatic payment happens.
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Question for those paid-in-full credit card users that pay their cards early or multiple times per month. Why? Is it that you don't trust YNAB yet to make sure you have put aside the full funds for payment? You don't trust yourself? You just hate the thought of debt so much, even if temporary and you're paying no interest on it, that you just feel better paying it early?
I'm just curious. I like to take every advantage I can from the credit card companies since they prey on consumers who don't pay their full statement balances which I've been in the (distant) past. I guess in the long run, the interest I make while my payment funds sit in high yield savings accounts won't add up to a whole lot but why not take advantage of it?
For me, it's freeing to have the whole thing automated to pay the statement balance on or near the due date every month. I just make my YNAB budgeted spending and don't worry about the credit cards or what their balances are at any point in time knowing I have the funds set aside to pay them.
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Superbone I can't speak for anyone else, but here was my situation. I signed up for YNAB in August. A few years ago I consolidated all my credit cards into one and started paying it down aggressively (it'll finally be knocked out in the next few months). After I signed up for YNAB I applied for and received a rewards credit card from my bank, and started using it for all my purchases. And for the first few months, I paid the balance every week or so. I think, for me, it was scary watching that balance go up and up even though I knew I had the cash to cover it. It took me a couple of months to get over it, but I did get to the point where now I just pay the balance on the due date.
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Boy Do INAB That makes sense. It might take some time to trust that when using YNAB correctly, the funds are always available and ready to pay off the balance at any point in time. Especially when you’re just getting off debt after many years. Speaking of which, congratulations! 🎉
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Superbone I have a couple reasons for paying mine off frequently.
1) I do hate the idea of CC debt and thus have mentally decided to treat them as debit cards. I do not want to use actual debit cards because I do enjoy the rewards and protection. I know I am probably giving up approximately 5-6 bucks per month by not maximizing the credit length but I don't care.
2) I have also found that it is easier to reconcile each account daily and while I am in there it is not burdensome to go ahead and pay the current balance. The routine of keeping all accounts up to date just seems simpler to me. I am 100% debt free, including house, and retired, what else do I have to do LOL, thanks YNAB.
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ynaber2613
ynaber2613 said:
I know I am probably giving up approximately 5-6 bucks per month by not maximizing the credit length but I don't care.That's not a trifling amount. It'd pay for YNAB every year.
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nolesrule you are correct but I do value keeping my credit cards paid down more than I do trying to maximize interest by using their money longer. I guess it is just the way I'm wired and it has worked wonderfully for me. I tend to lean toward simplicity.
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Superbone I have tried over the years to understand credit card due dates and how they relate to the date I made the purchase. But each time I try to figure it out, I have to chart it out. I don't want to do that, I just want to pay my bill as soon as it becomes a bill. I don't have enough cash to have an interest-bearing bank account, so I just pay as the bill posts to the credit card. The peace of mind is worth it for me.
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Amy H It’s quite simple. Here’s an article that lays it out for you:
https://www.thebalance.com/billing-cycle-960690
Your bill is due on the same date each month. It’s due before the end of the grace period which is usually between 21-25 days from the end of your monthly statement. There you go. No charts necessary. 🙂
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Superbone I have the same logic as you. I pay all my bills on the due date, but I've always been pretty well organized in that regard. It took a few months of me on YNAB to understand how the credit cards work and be comfortable with autopay. I'll say, before YNAB, I was terrified of the autopay - how did I really know I had enough money? But now everything is on autopay, I maximize my rewards cards, making ~$100 in cash back every month, and around $20 in interest in my accounts. We're almost debt free and I am so, so thankful for YNAB
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Heatskitchen What type of interest-bearing accounts do you have that yield $20 month?
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Spring Green Trumpet
$15K in an Ally savings account at 1.6% APY will get you ~$20/mo.
My high-yield checking pays 2.27% APY up to $10k balance, which is $18+ per month.
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Spring Green Trumpet I have capital one 360 and transfer funds betweeen checking and savings. It fluctuates and I’m sure I could find better rates but it’s something. I have about $15-20k in there on average (which is a YNAB win. A year ago that money would’ve been GONE)
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Mine are all set to autopay statement balance on due date.
I just update my scheduled transactions when I get the monthly statement to keep YNAB up to date so I know what the payments will be so I don't have to wait for the transactions to pull in.
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Amy H said:
understand credit card due dates and how they relate to the date I made the purchaseWhy do you need to know that? All I need to know is when the statement of my card is out and then set up a payment for the statement amount by the day before the due date indicated by the statement.
I have no idea what purchases are covered by my payment. It doesn't matter to me. All that matter to me is I won't pay interests if I pay the statement amount before the due date. -
I am able to set my card to sweep the payment from my checking account. Therefore, it is only paid when the bank sweeps it, and I can't be late as they are in control of the payment.
I do admit I get the itch to pay it off more frequently. As I don't like seeing the red number in my sidebar and like to see accurate cash balance in my checking. But I usually don't scratch the itch.
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My primary card (Citi Double Cash) still has a low enough limit that I tend to pay it more often than once a month - generally whenever my balance reaches ~50% of my credit limit. My other cards that are in less frequent rotation and rarely exceed 10% utilization are all set to autopay the statement balance on the due date.
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My wife and I are retired. I am 77, she is 76. Our incomes are from a pension and Social Security. We receive these early in the month, obviously. We use our credit cards to buy groceries, household goods, etc., in bulk the first week of the month, using only credit cards. By the second week of the month, most of our buying for the month is completed. We pay our cards off each month and haven’t paid interest on a CC for maybe 10 or 12 years and then only $12.00 and change for that year. Here is how we use our CCs: I checked with the banks on the due dates for each card to determine a set closing date. I had all of our CCs set up with a closing date of the 27th each month. This was determined by asking when they sent their reports to the CRBs, which is around the 22nd, 23rd each month. This gives time for the CRBs to have the reports tabulated by the 27th, which has been working out magnificently for the past three years. This has also brought an added benefit by increasing our credit scores significantly, although once they get up into the mid-800s, it’s difficult to raise them by any great amount. We pay off the CCs used for the month on the 19th or 20th and then use cash for the remainder of the month. I might add that I spent three years working out different scenarios, when to pay, how often, early, when due. Where we stand now works for us. This is not to say that it will work for everybody. I have no idea how it would work for those who are paid weekly, bi-monthly or whatever. If you are buffered, this would work if you are so inclined.
We are debt-free and I have a real gripe with the CRBs regarding those who are debt-free. One of their standards for determining a score is having a mix of accounts. This can have a high impact on one’s score. We have only CCs, no home loan, no car loan, no personal loans, nothing. One would think they would take into consideration those who have worked diligently to get out of debt. I realize that we could take out a personal loan and our scores would drop slightly for a while and then improve as the months go on, but I have an aversion to paying interest.
Also, since the CRBs determine scores based on usage of cards both individually and collectively, we never use more than 10% on any one of them. If there is a time when we may use more than 10%, i.e., vacation, we then make a PIF to keep it in balance.
My wife and I have been married 52+ years and we have always had a budget. Early on in our marriage, we actually used the envelope system. We didn’t have CCs until six years into our marriage and, even then, only sparingly. I set up my own budget to fit our lifestyle and did so, until I found YNAB4 and then nYNAB. I struggled with the CC methodology on both for a short while, but once I got the hang of it, it’s been clear sailing ever since. Thank you, YNAB.
And, just for perspective, we bought our first car, a 1967 Camaro, for $3,000.00. And, five years into our marriage, we bought our first house, a three-bedroom split foyer, for $19,050.00.
I appreciate all the insights and suggestions brought to these forums. I’m never too old to learn.
