Credit cards - Settle an argument

agnes

agnes

agnes

Soldato
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Settle and argument please, GD.

In both scenarios, the credit cards monthly statement is issued on the 10th of every month. If the CC is at a balance of £0 (so nothing owed) and a limit of £500.

Let's say you spend £500 on the 15th January. In my mind, I should then make a payment on 5th February, before the next statement is issued on the 10th February?

This way, I clear off the CC before the next statement is issued which will state the balance is back to £0.

Or, as a friend says, pay it AFTER the next statement so it shows you're spending and paying off???

The latter I feel will be silly and incur charges surely? At least I think I would.

Help settle this!
 
Your friend is correct. Your statement is essentially the bill - it works out things like the minimum payment you need to make. You normally have 14 days from your statement date to make the payment without incurring any charges or interest.
 
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Yea, if your balance starts at 0, then you wouldn't need to pay it off until after the statement - you still wouldn't be charged any interest until the next one, on the 10th March if there was any balance left
 
As scorza says - once you receive statement it will tell you minimum payment due and date cleared funds required. Spend anything in the month and when statement comes, that's the prompt to pay.

Slightly off topic but I have noticed some banks take an age in sending out ccard statements which (if paying via cheque) gives little to no time to avoid charges... very crafty!
 
Mine is set up on Direct Debit. My last bill was 14th Jan and they expect that payment before 08 Feb. So if I buy something on the 15th of Feb it will go on my 14th March statement and they will take the Direct Debit on the 8th April.
 
boxman2000 said:
As scorza says - once you receive statement it will tell you minimum payment due and date cleared funds required. Spend anything in the month and when statement comes, that's the prompt to pay.

Slightly off topic but I have noticed some banks take an age in sending out ccard statements which (if paying via cheque) gives little to no time to avoid charges... very crafty!
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Freakbro said:
^ Go online and paperless! :)
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This, go paperless and online statements. And why pay with cheque? Just have DD setup to clear...

So, I've been doing this wrong all this time?

Ideally, I'd have a DD setup on the 11th to pay the balance off in full after the statement is issued on the 10th?

Then anything spend after the 10th is stuck onto the next statement as per usual.

Damn. I now owe someone a beer.
 
yup - you should have up to circa 50 or so days free credit with a credit card if you're buying at the start of your billing period

that is for purchases at least, cash transactions are usually charged daily interest right away

credit cards are generally a good idea to use in general just for consumer protection and rewards points
 
I'd argue the above that credit cards are generally a good idea to use /IF/ you are sensible enough with the money and use it for genuine purchases.

I've had many friends get their first credit card whilst at university, max it out in a nightclub on beer and then struggle to get it paid off once they realized it's not magical free money.
 
99% of credit cards have a 56 day interest free period, so if you bought something on 15th Jan, it would start accruing interest on the 11th March.
 
You don't pay the bill at a restaurant before they have brought it to you...

Wait until you receive your statement for the last billing period, then settle up at least the minimum by the date shown.

You can make payment before you receive your statement if you are nearing your limit and need to free up some credit. I do this sometimes, I always pay the balance shown on my statement to another of my own accounts (less any minimum payment due so the card remains 0% interest). So I always have funds on hands to pay off a chunk if needed.
 
amigafan2003 said:
99% of credit cards have a 56 day interest free period, so if you bought something on 15th Jan, it would start accruing interest on the 11th March.
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This is completely untrue and misleading. What you actually mean is that credit cards have an UP TO 56 day interest free period.

This is because you can buy something on day 1 of the statement month, have the bill generated after day 31, receive it on say day 40 and have 14-16 odd days before the payment for that month is due, meaning no interest.

Only purchases on the very first day of the statement month would benefit from an interest free period of 56 days, it's completely wrong to say '99% of credit cards have a 56 day interest free period'.

I'm looking forward to a classic amigafan2003 reply where you spin this to make it look like thats what you meant all along, even though its obvious you didn't :p
 
In the scenario stated it makes naff all difference when it gets paid.

Before, after, doesn't matter. It achieves the same outcome as long as its paid before the time the interest kicks in.

It doesn't HAVE to be paid before the statement date though if that's what you were thinking.
 
You can pay it off before, but you don't have to make a payment (minimum/full etc) until after the statement.

It encourages people to use the cards.

I pay mine of in full automatically, x number of days after the statement to avoid any fees.
 
Kuros said:
I'd argue the above that credit cards are generally a good idea to use /IF/ you are sensible enough with the money and use it for genuine purchases.

I've had many friends get their first credit card whilst at university, max it out in a nightclub on beer and then struggle to get it paid off once they realized it's not magical free money.
Click to expand...

well to be fair that isn't just credit cards that is money in general those people are unable to handle
 
I pay an amount I consider large enough to always exceed the minimum by standing order, and then pay the statement balance less that amount manually. That last bit might be cheque, cash, a/c transfer, depending on what suits me and where I am. Oh, and one card is paid automatically because it's linked to a money market account, but that's only for larger purchases.

The first payment I mentioned ensures the cards never default, even if I forget or am away.

At OP, the cheapest, which is usually best, method is to always ensure the card balance is settled, in full, with funds reaching the card company before the due date. But as long as they reach by the due date, there's no advantage to paying even earlier except perhaps your peace of mind, and that's why I have the auto payments. So far, I've never failed to clear the balance by the due date.
 
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