The Priceless Plastic

Technorati Tags : credit card, statement date, interest free period, credit card optimization

I was not feeling that well today. Sore throat, runny nose, headache...all the usual suspect. Maybe I should take a MC tomorrow. Anyway, as promised I'll be sharing some secrets in optimizing the usage of credit card. It's not really a secret but most of us tend to overlook this in our credit card statement. The Statement Date!

So who cares about the statement date. I believe the first info that we look into a statement is the amt. outstanding, min. payment and payment due date. To most of us the statement date is useless. A typical revolving user (i.e. those who's not paying the full amount) will only pay attention to the min.payment and the due date. So, here lies the secret...

In Malaysia, all credit cards users are given an interest free period of 20 days from the statement date up to the due date. The statement date will never change for a credit card. For example, my Visa card statement will be printed on the 25th day of the month. That means my due date will either fall on the 13th or 14th of the following month, depending on the no. of days in the statement month (could be 28 to 31 days). In summary, the statement will capture all transactions dated between 26th of the preceeding month up to the 25th of the current month. So if I charge my card on 24 April, the transaction will be captured in April statement and the sum charged is payable on 14 May.

Here's the trick. I will delay all my card expenses a day after the statement date (in this case, on 26th). Therefore, the transaction will only be captured in next month statement dated 25 May and my due date will be on 14 June. So effectively, I'm enjoying a 50 day interest free period i.e. the no. of days between 25 May and 14 June! See the difference?

Some may be asking...so what? I'm just delaying the payment and at the end of the day I'll be obliged to pay the same amount. I may also lose control on my budget and use the money meant for the payment elsewhere. Rite...those are the pitfalls but I believe the pros totally outweighs the cons provided u have the discipline to make full payment on the due date.

I have been applying this concept to my autosurf programs. It works well for Compact Surfing (13% for 9 days) due to its fast payout....btw for ease of calcultion, I'll ignore the minor egold charges in the following illustration.

26th April : I charged USD1,000 to my card. Invest the money in CS.
4th May : First package expired
6th May : Received payment amounting to USD1,170 and reinvest
15th May : Second package expired and earned USD1,369
17th May : Received payment and reinvest USD1,369(3rd round)
26th May : Third package expired and earned USD1,600.
28th May : Received third payment and reinvest USD1,600 in the fourth and final cycle.
6th June : Final package expired and earned USD1,872
8th June : Received final payment of USD1,872

I'll then convert the egold to cash (this normally take 2-4 days). So on 14th June (my card due date) I'll pay the USD1,000 and have USD872 as profit. Spend half of it and reinvest the other half. Now, I'm not using my own money...I'm just reinvesting the profit after securing back the capital. So I'll be not at loss if the prgm collapses in the future (hopefully it will stay).

A word of caution. This will never work if the prgm goes kaput between 26 May to 8 June. That's why you have to choose the stable and reliable program such as Compact Surf

And for those who are not keen in AutoSurf, u can apply the same concept to your monthly utilities bills. Don't pay cash. Settle the bills by credit card a day after your statement date and keep the cash in ASB or bank for 50 days. So u'll earn 50 days interest from the bank, albeit much lower than Compact Surf but still u are effectively using the "legal ah long's" money to your advantage. Pretty neat isn't it. But make sure u settle the full amount otherwise u'll be charged interest on your outstanding balance. Discipline is the key.

Ok la enuf ramblings on this priceless plastic.

Signing off at 11.45 p.m.