Credit cards; those innocent plastic cards stashed in our wallets to be pulled out every time we need to make payments. It makes us feel so powerful and limitless. In fact these products are quiet powerful, and as long as you know about the various features and how to take advantage of them, credit cards are a great way to make your lifestyle more comfortable. If used correctly, they can also help you to save a lot of money.
You may have been using credit cards for a long time, and you may have a number of it at any point of time. However, if you thought that you know everything there is know about them, you might surprised to know that there is something called ‘free float period’ that many of us have no idea about.
For those who are unaware of this important feature; free float period (or grace period, as it is sometimes called), is a certain period when you will not be charged with any financial charges or interests when you make purchases. Surprised? Read on to learn more about this great feature and how you can take advantage of it.
Advantages of Credit Card Float Period
Normally, a credit card’s floating period commences after the previous month’s billing cycle. It ends at the deadline of the current month’s time for payments. In Philippines, credit card companies give cardholders up to 20 days to pay off their balance. This means that the floating period will be around 40-45 days.
You cannot have any credit card balance if you want to take advantage of free float. So make sure that you do not have any outstanding balance. Ideally, you must settle bills before the due date each month to achieve this. If achieved, you will be only paying for the items that you have purchased and will not be charged extra.
If you happen not to make your payment by the due date, you will be charged with interest from the day that the first transaction has been made. Unlike commonly believed, it is not from the due date of the payment. Not only will you have to bear the interests and other financial fees, but you will not be eligible to float your purchases until you pay off all outstanding balance or on the next billing cycle.
You will not automatically be free from interests because of the float period even if you are eligible for all transactions. There are transactions you cannot float, such as credit card cash advance for example, which are not covered by the float period and incur all the financial charges.
The main thing that you must make sure of when trying to save money using float is to pay the balance before the due date. This will make sure that you are only paying for your purchases and not for the fees/interest. Doesn’t your hard earned money deserve not to be split among your credit card companies?
You can maximize the floating period’s duration so that you can pay off your debt in installments. The billing cycle’s float period will end on the due date. Depending on the credit card type, the billing cycle can range from 20-30 days.
Here is another way that you can take advantage of the credit card float and make money: you can purchase the item within the period and pay it off in less than 40 days.
In case your current billing cycle and the credit card payment period does not match the cardholder’s paydays, you can ask your card issuer to move the cycle and period to coincide with the payday. Chances are that the bank will be happy to comply with your request.
So what’s the bottom line?
The whole point of the float is to encourage you, the cardholder, to pay your bills on time. As long as you make it a habit to pay your bills on time you can take advantage of this feature and thus save a lot of money. Credit cards can be used to your advantage, if you are careful, and if you are not you could end up losing a lot of money.