29. Take Advantage of Your Credit Cards

by H. W. Moss

I opened my mail the other day and received a $500 gift from a credit card company.

Don’t get me wrong. They didn’t want to give me this gift which I will have to pay back the following month, but they had to give it to me. It took the form of $500 worth of automobile repairs I purchased, but I timed the repair so that the charge to me would be in the next billing period.

I knew when to have the work done so that the charge would not appear on my bill until the following month. In essence, I received $500 interest free for two months.

Credit cards are often misused and are the bane of many. However, they can also be used wisely. Taking advantage of a credit card issuer’s own rules is like getting free money. You simply have to follow a couple rules and learn your cycle date, the posting date and how to calculate your payment due date.

The first rule is never pay an annual fee for a credit card. Credit cards are free.

Second, pay your card off every month and never carry a balance.

These are strict standards you must follow if you wish to take full advantage of your line of credit. Follow these two rules and you will never pay a finance charge. If you cannot follow these two rules, I do not recommend you get or use a credit card.

A corollary to these two rules is: Never be late on a payment.

A credit card issuer offers a limited cash resource you may tap into, but you must refill it every month. The credit card company tells you exactly how much is available on your bill. Added together, several credit cards can easily be $50,000 in available credit.

It is only when someone taps into this rather large sum, but does not totally pay it off every month, that people can become overwhelmed by debt. Not always, of course, since it is possible to borrow with the reasonable expectation of repaying even large amounts when they come due.

You may use your card for nearly every purchase because almost all grocery stores, gas stations, restaurants and clothing stores take credit cards. Do not look at these purchases as long term and keep them within your monthly budget. As for major purchases, like the one I made for car maintenance, they should be planned and timed in advance so the money is available when the bill comes due.

A finance charge is a penalty. It is like paying the bank to hold your funds instead of the other way around. A late fee is also a penalty, but it is out of proportion, way too high in relation to the price of a purchase.

If somehow you make a payment late, even by one day, you will probably be hit with a finance charge. You may or may not have a late fee. Either way, if you have been on time for the last twelve months you may contact your credit card issuer and ask them to waive both of these fees.

They do this “as a courtesy,” but they will not tell you that unless you ask.

Most credit card issuers will waive fees and penalties once a year, but it is sometimes possible to have it done a second time if you are persistent in your request. That’s me: Pushy.

Sometimes the decision to waive fees is not given to the line person who is your first point of contact. If you do not get satisfaction in requesting they waive penalties and fees, ask to speak with a supervisor.

When you contact a credit card issuer always be polite. There is never just cause for getting on a high horse. As my daddy used to say, “You catch more flies with honey than you do with vinegar.”

Credit card issuers make money even if you pay them off every month because they charge the merchant a small percentage of every transaction. It is preferable to use a credit card that pays you. This costs the merchant a larger percentage, thus not all stores accept a card that does this.

I always pull out the one that pays me first and ask if it is acceptable. Which is the reason why I keep several different cards in my wallet.

Never borrow cash on your credit card. A cash advance is NEVER free. If you find one that offers a free cash advance, borrow as much as you can. Put that money in a savings account. When the due date arrives, pay it off and keep the interest.

The one exception is when the grocery store asks if you want cash back. If you pay your bill off every month, there is nothing wrong with borrowing at that point. I don’t do it because it simply adds to the monthly bill.

Know your cycle date. The cycle date is also known as a closing date. It is usually a month long but some credit card companies cycle every 20 days. Don’t use cards with short cycle dates.

Know your payment due date. Payment due dates change from month to month. If the card cycles the same day every month, the payment due date will vary by the number of days in that month. If it cycles on another schedule, it will come due on a different day of every month.

A cycle date is not the same as a posting date. A transaction is posted the day you make a purchase, which is usually the date of the transaction. But some merchants do not turn in their transaction records the same day of a purchase.

The bank refused to allow me to pay my mortgage with a credit card. I asked.

I also asked, but my insurance agent refused to put my annual fire policy on any credit card, let alone the card that pays me back.

You can bet I’ll ask again next year.