Credit Card Float Questions

[TheStachery]

We charge a majority of our purchases on credit.  We do this for our the credit card rewards, security, etc.  Every month we get the CC bill, we pay it in full.  We haven't paid a cent in interest. 
Thinking about this, I'm wondering if I should start riding the CC float.  Is there much benefit? 

Here is my most current situation:
my credit card balance is $3169.00
my "new balance" on the statement is $783.45
my "minimum amount due" is $35.00
Bill is due on 3/20/17

I just wonder if I'm defeating the purpose of the free interest period by paying in full.

Any comments / suggestions welcome.

Thanks.

[microwaves]

Do you have a 0% APR credit card? It's pretty easy to forget when the promotional APR period ends and then you have to pay interest on whatever the balance is. That certainly hurts the case for using your credit cards this way, though the bigger issue in terms of risk is that you won't have the cash available when it's time to repay the card.

For example, you put $7,000 on a 12-month 0% APR card, paying $35/mo for the first eight months. After eight months, you lose your job. If your response is, "But that's what my emergency fund is for!" then okay, great, but you also still have to pay your regular living expenses for those four months. Your balance is still $6,720 but you also have to pay living expenses ($1,500/mo?), so once the promo period ends and you have to pay off the card in full. You'll need $12,720 in cash on hand in those last four months. I can't imagine most people have that, and the people who do probably aren't interested in making only $400-$450 in interest for that risk.

If it's an immediate cash flow issue, it makes more sense, but to just make a few hundred dollars in interest isn't worth it to me. I'm actually in this situation right now and I'm tempted to get a balance transfer card but I'd rather avoid opening another credit line just to free up cash when I can always get a 0% personal loan from First Bank of Mom & Dad.

In short, I wouldn't use a 0% interest credit card in most cases if my goal is to save money in an index fund.

I just reread your question: If the balance is already on the card and it's a 0% APR card, pay the minimum every month and put the difference in a GSBank savings account. If it's a basic card, pay only the monthly balance. This has two primary benefits: You get 1% interest for doing nothing, and you've successfully taken a 0% loan in case you should need that cash for something, effectively giving you a temporary boost to your emergency fund. Even for a basic credit card like what you're talking about, you can average the monthly spend to get a monthly line of credit for 0% interest.

[wbranch]

When you say pay in full it sounds like you are paying the current credit card balance and not just the new statement balance? I only pay the statement balance, I bet that it has earned me $.50 of interest in the last year by keeping those funds in my checking account for the couple weeks between the statement date and the due date. In other words, the interest float is not a big deal.

[TheStachery]

When you say pay in full it sounds like you are paying the current credit card balance and not just the new statement balance? I only pay the statement balance, I bet that it has earned me $.50 of interest in the last year by keeping those funds in my checking account for the couple weeks between the statement date and the due date. In other words, the interest float is not a big deal.

that is correct, on 3/20/17 i would pay the total amount of $3169.00.  Probably not a smart move.  Although as you pointed out, there is not too much interest that can be earned on my end by not paying it in full.

[TheStachery]

Do you have a 0% APR credit card? It's pretty easy to forget when the promotional APR period ends and then you have to pay interest on whatever the balance is. That certainly hurts the case for using your credit cards this way, though the bigger issue in terms of risk is that you won't have the cash available when it's time to repay the card.

For example, you put $7,000 on a 12-month 0% APR card, paying $35/mo for the first eight months. After eight months, you lose your job. If your response is, "But that's what my emergency fund is for!" then okay, great, but you also still have to pay your regular living expenses for those four months. Your balance is still $6,720 but you also have to pay living expenses ($1,500/mo?), so once the promo period ends and you have to pay off the card in full. You'll need $12,720 in cash on hand in those last four months. I can't imagine most people have that, and the people who do probably aren't interested in making only $400-$450 in interest for that risk.

If it's an immediate cash flow issue, it makes more sense, but to just make a few hundred dollars in interest isn't worth it to me. I'm actually in this situation right now and I'm tempted to get a balance transfer card but I'd rather avoid opening another credit line just to free up cash when I can always get a 0% personal loan from First Bank of Mom & Dad.

In short, I wouldn't use a 0% interest credit card in most cases if my goal is to save money in an index fund.

I just reread your question: If the balance is already on the card and it's a 0% APR card, pay the minimum every month and put the difference in a GSBank savings account. If it's a basic card, pay only the monthly balance. This has two primary benefits: You get 1% interest for doing nothing, and you've successfully taken a 0% loan in case you should need that cash for something, effectively giving you a temporary boost to your emergency fund. Even for a basic credit card like what you're talking about, you can average the monthly spend to get a monthly line of credit for 0% interest.

I think the interest rate is 14%.  I'm not worried job loss or lack of funds.  We have way more than enough in our EF, actually probably too much.  We have no debt besides a home loan that we don't have any plans to pay down sooner.

[microwaves]

Yeah, I was thinking you were talking about 0% APR cards. :) I wouldn't obsess over this at all. Like the other poster said, the difference is negligible. I still pay the monthly balance on my cards instead of the total, but it really doesn't matter unless you want to free up that thousand or so every month.