
When to pay Credit Card
First I'm happy to say that aside from my car and my home, I'm debt free. However, I still use a credit card to pay for all budgeted expenses, and then I pay the credit card off at the end of the month. This allows me to take advantage of CC rewards and almost covers my entire Christmas budget. The timing of this action is where I have a question:
Today is 4/27 only 4 days away from the end of the month. All of my budget categories that go to my CC are covered except for my natural gas payment and my mobile phone payment. Both of those are scheduled to be debited on 4/29.
I've been using YNAB since Jan. and I've been striving to get everything to zero and time it so that on the 1st of the month I'm at zero on my credit cards.
I was thinking this morning of just paying the balance on that CC, but if I do, then it's possible that those 2 charges will be in April and not December.
Does this really matter? If those charges do post in April, will they carry over in my credit card balance in May and then I just pay it at the end of may? Should I be concerned about the timing?
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corecrash said:
I've been using YNAB since Jan. and I've been striving to get everything to zero and time it so that on the 1st of the month I'm at zero on my credit cards.
I was thinking this morning of just paying the balance on that CC, but if I do, then it's possible that those 2 charges will be in April and not December.Why? What is the logic behind this ambition? I don't understand the need to have it at ZERO.
Just pay the statement balance on or just before the due date. As long as all your charges are covered by your payment category, only pay what you need to pay when you need to pay it, no more and certainly no earlier. -
In normal operations, there are no reasons to pay off a card before it is due. The two most common reasons to do so are:
- Big charge coming up and you need the balance available
- Credit check coming up and you want your debt load to be a lower percentage (this is marginal, and not really worthwhile to focus on). Keep in mind many banks will report your balance a couple times a month, and being at $0 on the 1st doesn't give you an advantage here.
Outside of those two reasons, better to hold the money as long as you can in one of your own interest bearing accounts and pay the CC when due. I myself have a day of the month I just sign in and pay my cards, then don't worry about it again until the same day the next month (though I try and import at least weekly).
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nolesrule said:
use this as an opportunity to keep more money in a savings account, and take advantage of the grace period.Free money for less work? Works for me.
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For me the money is in the budget when I make the transaction, it comes out of the budget when it posts to the cc, and it comes out of the account whenever the autopay pulls it. I have my cc on autopay for the statement balance 2 days before the due date. (there is no option for autopaying the account balance) but thats all thats required to avoid interest, and on any given day I have the cash on hand to pay the balance to 0 at a moments notice.
And as others have said keep that money where you can make interest for as long as you can without paying interest on the card, combined with your cash back makes a nice bonus.
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I have my credit card accounts setup to automatically pay the last month's statement balance on the due date, so that I don't have to do anything to make sure I don't pay a dime of interest. This works very well for me and I highly recommend it. There's no human error involved. You don't need to pay the balance down to zero, just make sure to pay the last statement balance by the due date and you'll be fine.
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Karabats said:
In normal operations, there are no reasons to pay off a card before it is due.Peace of mind for me...
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This has given me the opportunity to shift my thinking about my finances. After reading all of your replies, I'm shifting from thinking about it from a month to month perspective to just one big pool of time and money. I suppose it doesn't matter when something occurs YNAB just keeps going and carrying balances over. I have scheduled an auto pay for my CC to pay the statement balance when it's due.
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WordTenor said:
In addition, if you’ve been managing your credit card well using YNAB, you are likely to become eligible for higher limits. You can then combine cards, or request a limit on your main card where by the highest balance you usually hold is less than 30% of the limit.Yes, I periodically ask for increases in my limits even though I have no need for them just for credit utilization purposes. My limits are so high that I average 1% to 3% credit utilization in spite of the fact that I put most of my monthly expenses on credit cards and automatically pay the statement balances on their due dates.