Know Your Credit Card Date(s)

credit cardsKnowing the cutoff date for your monthly credit card statement can come in handy, especially when making big purchases. On my credit cards the cutoff date appears to be the end of each month (and, for all I know, that’s how it is for everyone’s credit card). I do know that you can pick your payment date, but maybe all statements reflect purchases from the beginning to the end of the month vs. mid-month to mid-month or some other period. I haven’t really noticed.

Anyway, timing a purchase to fall into a certain billing cycle can be desirable. Let’s say your typical monthly credit card balance is $4,000, but a couple times/year you experience additional, predictable, expenses which bump it up to $5,000 (eg. auto insurance which you pay twice/year.) And, let’s say your auto insurance gets billed in December and June. Knowing this, and knowing when your credit card cutoff date is, you might then time another large purchase, a needed set of new tires, for example, so that you don’t end up having to pay for both the tires and the insurance during the same billing period.

Our lives are much too complicated to be able to plan around just a few, predictable expenses, so the previous example is sort of laughable. But, here’s a good one that I just ran into. We are in the middle of fixing and flipping a townhome I bought at a foreclosure auction. A few of the expenses are pretty substantial – appliances for $2,500 and carpet for $1,500. The property will go on the market shortly after getting both of these and, with any luck, could be sold within a month. I would MUCH rather have to pay for these items after we’ve closed and I have the money back in the bank.

In our situation purchasing these items on August 30th vs. September 2nd could very well mean the difference between having to pay for them prior to the closing vs. after the closing. Since our cash position is significantly lower before vs. after the closing, I really want to delay paying these expenses as long as possible. So, I purchased the appliances on September 1st (when there was a labor day sale). My credit card statement closed with purchases made on August 31st and is due September 26th. The appliance purchases, though, won’t show up until the next statement and won’t have to be paid until October 26th. Likewise, I’ll be paying for the carpet later this week and the expense will show up along with the appliances. With luck, the townhome will be sold by then.

And, with luck, we’ll make a profit on it. That’s tough these days!

I will, never, however put off paying for something and incur interest charges!

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