I remember when I got my first Credit Card and my sister was explaining to me that I would get up to 55 days interest free when I make a purchase.
This was just the ticket I didn’t need to use my credit card, and I mean really use. I didn’t really know how credit cards work, or how the interest free period work so I just took for granted that I wasn’t paying interest and happily spent up to the limit in a very short time.
It wasn’t until years later when I started working in the Bank that I learnt how credit cards really work and how to use them to avoid paying interest. In fact that was also about the time I learnt credit cards (in most cases) are used in the way the Banks want you to use them, so they make more money.
The first thing you should be doing is asking for and reading the Terms and Conditions on your credit card so you know how your card works and how to avoid paying more than you should. I know what you’re thinking, really? The Terms and Conditions? Should we just put needles in our eyes?
It is worth the investment in your future to learn how your credit card works and more importantly that you are using it to your advantage (and not the banks).
What I learnt about my ‘up to 55 days interest free’ was that the credit card was on a cycle and depending when I made the purchase depends on how many days interest free I get. In fact, if I made a purchase on the day prior to my statement/bill being created, then I had 1 day interest free on that purchase – not quite the 55 days I thought.
This was amazing, because I now know, if I have a big purchase to make and I’m a day or two off the statement being closed off I can hold off the purchase and it will be on the following bill – giving me longer to save the money to repay it.
I learnt with my credit card, as long as I pay the ‘amount due’ on the credit card statement, in full, then I would pay no interest at all. That is the full closing balance, not the minimum amount due. This was so helpful because the balance and closing balance are always different and I don’t like paying for something that is on interest free when that money can be saving me interest elsewhere until I need it.
So if it takes a glass of wine and a quite night in, take the time to learn about your credit card and start using it to your advantage.
If you would like help getting your credit card debt under control, contact me today.