Stretch Grace Period On Your Credit Cards

Saturday, December 31, 2011, AM | Leave Comment

Credit-card issuers give you grace period to pay your bill. This period starts from the time when you buy something to when you have to pay your credit-card bill and amounts to an interest-free loan, as long as you pay off the balance in full by the due date. Here’s a way to stretch those periods to improve your cash flow. It takes disciplined spending and attention, but it can give you two or more extra weeks each month before you have to pay your bills.

Today is the last day of the year. In the new year, you could start doing the following to stretch grace period on your credit cards. You need two cards to apply the method below.

Get two cards

One card with a monthly bill sent on the first, the other with one sent on the 15th of the month. Many lenders will adjust your billing date, but you have to ask them. By juggling cards and grace periods, and by paying each card’s bill in full every time, you can carry interest-free balances for longer than if you had just one card.

Always use the card whose bill was generated most recently. You shouldn’t have to pay those charges for at least five weeks and maybe as many as seven weeks. This is approximate. Grace periods vary. And card companies may change billing and due dates periodically so keep a careful eye on these deadlines. Check your account online to stay up to date.

If you had only one card that billed on the first of the month, and you charged something on the 30th, you would have to cover that item in as soon as three weeks.

In a Nutshell
The best way to improve cash flow, of course, is to stop buying stuff you don’t need. Every household’s priority in bad times is to reduce card balances that often carry interest charges of more than 20 percent. Using cash in stores instead of plastic can help do that.

Once you’re in a position to pay off balances each month, an extra card with a different due date can stretch your dollar a little further.

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