How to make the interest free period work for you

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Once you have your debt paid off and your credit card (Singular not plural – cut up the rest) is back to a zero balance I want to show you a trick that my friends use to make money out of nothing.

You have probably heard the ‘ol saying about the 55 day interest free gimmick your credit card provider splashes around to get you spending more, right? Why not use this to your advantage. Let me show you.

Sheet 1

Most credit card statements span a month and as you can see in the image above the statement date is from the 8th of the month to the 8th of the next month. By the time your provider posts out your monthly bill, they will give you additional days to pay the bill before they start charging you interest. In the example above (my bank) the payment date is the 24th. That’s 47 days before interest will start being charged. So, if you bought something on the 9th of the month (avoiding any surcharge) you won’t be expected to make a payment until the 24th of the next month.

Now, what if you parked your fortnightly wages into an interest bearing account over this period and just used your credit card for everything. At 2% (approximately) you would have made eight dollars in interest. On the 24th you pay off everything you spent over the forty seven days and are square.

I also have friends who use this successfully by parking their wages in their home loan account and have the flexibility to withdraw it when they need to.

The most important part of this strategy is ensuring the TOTAL amount is paid off each month thus avoiding any interest charges. It takes a bit of discipline to keep this type of strategy working for you and avoiding the temptation of spending a little more than you should is always at the forefront.

The other thing to watch out for is the provider that charges an annual fee.

Sheet 2

The annual fee can sneak up on you if you’re not ready. It pays to shop around and if you are considering transferring your credit balance to take advantage of a good deal, you will need to check with your current provider to ensure they don’t have a penalty clause in your contract where they will charge you a percentage of your balance as an exit fee. Punishment for leaving as it were.