Question about paying off credit card every month / ensuring no interest

WorkingTowardsDebtFree

I just have a quick question about avoiding paying interest by paying off my credit card every month.

I get paid on the 21st of the month (or the 19th this month as the 21st is a Sunday). If I go online and pay the balance on my debit card it will actually show a zero balance on the 23rd (two working days after making the payment).

I'm nowhere near my limit but if I was to use the credit card it in a supermarket on say Friday (or any given payday, the same day I make payment to clear the balance) would this mean that the balance wouldn't reach zero as although I made a payment, another charge was made? Would that have implications for interest next month?

Should I wait until the credit card has a zero balance showing in the online management website before using it for groceries again in order to ensure I don't accrue interest next month?

TIA!

[Deleted User]

You need to clear the statement balance in full each month, by the due date.

As long as you do that, you can use the card whenever you want. Work to statement dates, not your payday.

WorkingTowardsDebtFree

Sorry I'd originally posted this in the wrong forum - edited / reported that post and re-created here.

Someone had replied as I did that though and told me just to setup a DD with the full amount to avoid guesswork. I think the question is the same though - do I need to wait for the DD payment to show on my credit card to get a zero balance before using it again, so a balance isn't carried?

All that said, I know a lot of people love DDs and there are plus points to using them, I've just gotten into the habit of being totally in control - I get paid, I spend an hour paying all of my bills online, I know I'm good for the month.

No messing about, no having to check DDs at various points throughout the month to ensure they've been paid, no having to make sure that wrong amounts haven't been taken, etc. I know that there's the DD guarantee but it's still hassle I don't have to deal with. In the past I was bad with my own financial management, but I also got stung by companies not calling for DDs correctly that wasn't my fault. It caused a lot of heartache that only gets sorted by hours upon hours of dealing with call centres and banks, etc. Once bitten, twice shy and all that.

Semple

Deleted_User wrote: »

You need to clear the statement balance in full each month, by the due date.

As long as you do that, you can use the card whenever you want. Work to statement dates, not your payday.

As above, i think you're getting confused as to when the balances must be cleared by.

WorkingTowardsDebtFree

Thanks zx81 (my reply above obviously wasn't to you!).

As I say though, thanks - you've answered my question and put my mind at rest there. Just want to make sure that I don't carry interest unnecessarily.

Semple

WorkingTowardsDebtFree wrote: »

I think the question is the same though - do I need to wait for the DD payment to show on my credit card to get a zero balance before using it again, so a balance isn't carried?

No you can carry on using the card.

The CC company will work out your statement balance between X-date and Y-date and send you a bill. If you've purchased something on Y-date+1 then it will roll into next months bill. No need to worry about getting down to a "zero" balance, as long as you ensure the full statement is paid off in full each month you will incur no interest.

Nebulous2

Statement dates fluctuate a wee bit with most cards. If it is close to your pay date then it becomes more complicated and paying on your pay date "could" get you into interest.

The amount of time to pay after the statement also varies with different credit cards. Ideally your statement would be coming out roughly 10th to 14th, with 21 days to pay.

When you get your pay you pay the full balance showing on the previous statement -regardless of what you have spent since. As long as it hits your account before the due date the job is done.

Paying a wee bit of interest as a one-off isn't the end of the world. It sharpens the mind to work out where it has gone wrong and make sure you don't do it again.

I have direct debits set up on my credit cards but sometimes pay the balance when I get paid as well. I need to circulate money around different bank accounts and not to be too blatant, instead of paying it in and straight out again I sometimes pay it in and pay my credit card with it.

My credit card doesn't take the DD if I have made a manual payment, but some of them do- so a DD can complicate things if you are mixing both types of payment.

WorkingTowardsDebtFree

Thanks for the insight Nebulous2. :beer:

My statement date is the 7th of the month, and my payment date the 28th. I always pay on pay day (21st, earlier on months like this month where the 21st is a weekend) and it's always cleared by the 23rd - so all that being the case, I should have no issues in just paying the statement balance on payday every month.

I like the certainty of making a card payment over DDs so probably won't mix and match. I know I've made the payment on payday, it shows immediately on my pending transactions with my bank, and I just check two days later. It's the same payment day and same checking day with all my bills. Keeps things nice and simple, and I keep peace of mind.

planteria

Deleted_User wrote: »

You need to clear the statement balance in full each month, by the due date. As long as you do that, you can use the card whenever you want. Work to statement dates, not your payday.

agreed. but also bear in mind that you can change your statement date, and thereby payment date, to suit you & your pay day.
and setting up a Direct Debit to take the full payment is the safest method to ensure that the balance is cleared in full each month.

Nebulous2

WorkingTowardsDebtFree wrote: »

Thanks for the insight Nebulous2. :beer:

My statement date is the 7th of the month, and my payment date the 28th. I always pay on pay day (21st, earlier on months like this month where the 21st is a weekend) and it's always cleared by the 23rd - so all that being the case, I should have no issues in just paying the statement balance on payday every month.

That should work fine for you then. There is no one size fits all. Find something that works and go with it. Moving my money to where I want it after I have been paid is quite satisfying and I can't imagine forgetting - it is a high priority for me. Other people like the certainty of a direct debit, as they don't think they will remember.

WorkingTowardsDebtFree

Nebulous2 wrote: »

That should work fine for you then. There is no one size fits all. Find something that works and go with it. Moving my money to where I want it after I have been paid is quite satisfying and I can't imagine forgetting - it is a high priority for me. Other people like the certainty of a direct debit, as they don't think they will remember.

Yup, I agree. For me DDs messed up for me on quite a few occasions by different companies for different reasons. I was in a financial mess of my own at the time, and I take responsibility for my own financial mess, but those actions caused a lot more stress. It's easy enough to say that there's the DD guarantee so you can get your money back from your bank instantly. For that for me it involved taking hours off work on multiple occasions to sit in a bank, stake my case and get my money returned. Of course, this was after other DDs failed to go out because too much money had been taken or a company had moved the DD date to immediately before my pay date. I then got hit for for those secondary DDs. Sometimes with charges by the bank, sometimes with penalty charges by the companies - and sometimes with late payment markers by the companies on my CRA files.

Those things shouldn't happen - and these days things may be better; but once bitten twice shy means ten times bitten, I'm not a financial sadomasochist.

I'm happy to have my routine and like you have the satisfaction that I've worked hard for a month, earned my salary, and paid for something. It's like when you buy something with cash over using a card - with cash or an online transaction it feels real. With a card or DD it doesn't.

The only time I can imagine that I would miss a payment is if I had been hit by a bus, struck by an immediately deliberating illness, or was dead. In all of those cases there are bigger things to worry about.

From that sense I've learned a lot, I'm a lot more disciplined and financially responsible. Whilst DDs may be convenient for some, they were part of my downward spiral when I wasn't financially responsible or disciplined.