Poll

Which Amount Do You Pay?

Statement Balance
81 (67.5%)
Current Balance
35 (29.2%)
Something in the Middle
4 (3.3%)

Total Members Voted: 118

Author Topic: Credit Card: Pay Statement Balance or Current Balance?  (Read 32423 times)

JGB

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Credit Card: Pay Statement Balance or Current Balance?
« on: December 12, 2014, 09:21:18 AM »
We all know that it is a must to pay off the balance of our credit cards every month. But what balance amount do you use to determine the size of your payment?

Typically, there are several weeks of transactions between when the last statement arrived (with the corresponding pay-this-amount-and-avoid-all-interest balance) and when the payment is due. Since I pay online, I can easily see that the difference between the balance on the statement and the balance at the time of payment is (as would be expected) on the order of 50% higher at the time that I log in to make the payment. In these cases, I often find myself vacillating between paying the statement balance or paying the current balance, and I tend to end up with an amount somewhere in the middle.

Which amount do you pay? Why?

boarder42

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Re: Credit Card: Pay Statement Balance or Current Balance?
« Reply #1 on: December 12, 2014, 09:22:50 AM »
You only pay the statement balance. Why give them money before they request it.


FLBiker

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Re: Credit Card: Pay Statement Balance or Current Balance?
« Reply #2 on: December 12, 2014, 09:25:11 AM »
I autopay the statement balance a day or two before it is due.

neo von retorch

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Re: Credit Card: Pay Statement Balance or Current Balance?
« Reply #3 on: December 12, 2014, 09:26:28 AM »
You only pay the statement balance. Why give them money before they request it.

Same.

I'll also chime in that with my Amex Blue Cash Preferred I'll pay StatementBalance-RewardsStatementCredit each month. (Rewards cannot cover your minimum but do count as payments otherwise.) With Citi Double Cash, I take a check (or bank deposit if it's available/working) and still pay the statement balance.

samburger

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Re: Credit Card: Pay Statement Balance or Current Balance?
« Reply #4 on: December 12, 2014, 09:26:59 AM »
I always pay the current balance, and I often do it more than once per month.

I use credit cards for the rewards, not to help my cash-flow, so I calculate my credit card spending the exact same way I calculate cash spending. If I have $1,500 in my checking account and I charge $500, I assume I have $1,000 left in my checking account (I use YNAB, so my running YNAB balances are [checking account] - [credit card charges]). Paying the current balance makes my checking account balance match my calculated total.

The_path_less_taken

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Re: Credit Card: Pay Statement Balance or Current Balance?
« Reply #5 on: December 12, 2014, 09:56:41 AM »
I pay the statement balance the day it's due, by phone so no stamps or trip to the post office.

The_Captain

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Re: Credit Card: Pay Statement Balance or Current Balance?
« Reply #6 on: December 12, 2014, 10:02:57 AM »
I generally pay the balance as it is when I pay it, since it makes it more obvious how much money I actually have cashflow wise. It's all tallied up anyway in You Need a Budget, but I like having the credit accounts paid off, as I dislike when they go above $500-1000 or so anyway without being paid off.

Mississippi Mudstache

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Re: Credit Card: Pay Statement Balance or Current Balance?
« Reply #7 on: December 12, 2014, 10:10:16 AM »
I pay the entire balance shortly after the statement arrives, so there's usually just a small difference between the statement balance and the current balance. I'm sure it costs me some minuscule amount in the long run to pay before the balance is due, but it's hardly worth it to me. I just prefer to zero out my balance each month.

MotoMM

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Re: Credit Card: Pay Statement Balance or Current Balance?
« Reply #8 on: December 12, 2014, 10:15:42 AM »
Current balance... the amount of interest on that amount in my checking account is maybe a penny?  And the money is already spent anyway.

Nothlit

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Re: Credit Card: Pay Statement Balance or Current Balance?
« Reply #9 on: December 12, 2014, 01:02:29 PM »
I don't even think about it. I have all of my cards enrolled in auto-pay. They withdraw the statement balance on the due date.

TexasStash

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Re: Credit Card: Pay Statement Balance or Current Balance?
« Reply #10 on: December 12, 2014, 01:37:29 PM »
I do think in principle (in terms of maximizing your money) it makes sense to only pay the statement balance, but I find myself having a tough time justifying a hard position one way or the other unless you have a large monthly spending amount (which is typically not as likely within the Mustachian crowd) and/or are actively pushing every penny into investments. If you're like me and you give yourself a significant cushion in cash (e.g. 3+ months of expenses) for the psychological benefits, paying the statement or current balance means a few pennies in interest difference, which is a rounding error to me and not worth the hassle.

If you're actively keeping your cash flow at around 1 month of spending or less, then yeah makes perfect sense to pay only the statement balance and earn money on the rest of the balance.

frugaliknowit

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Re: Credit Card: Pay Statement Balance or Current Balance?
« Reply #11 on: December 12, 2014, 02:28:54 PM »
Similar to Samburger:

Interest rates are near zero.  I am a one person frugal household.  The interest I would gain by deferring payment is worth nothing.  I am in it for the convenience and cash rewards.  By paying within a few days of purchases via bill pay, I force my spending to be aligned with my budget/cashflow.

boarder42

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Re: Credit Card: Pay Statement Balance or Current Balance?
« Reply #12 on: December 13, 2014, 08:19:12 AM »
I pay the statement balance the day it's due, by phone so no stamps or trip to the post office.

do you not have the internet?

Left

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Re: Credit Card: Pay Statement Balance or Current Balance?
« Reply #13 on: December 13, 2014, 08:37:24 AM »
I pay current balance bi-weekly when I get paycheck. I'm not using the credit card to defer payment for a month, I've spent the money to collect a few cents/dollars. if I was using cash, it would be gone anyways. I'm using credit card as an easier payment method. So I already consider the money gone the moment I bought something with it. I do current balance since I like seeing it at zero after paying it. And I reset my credit limit back to max too. Even with a credit limit around $50k per card, I still like having it all available even though I never use 1/4 of that. Part of it is I use my credit cards as my emergency funds instead of keeping a big amount in the bank like I used to. Before I kept $30k in a money market as an emergency fund, now I keep $10k as emergency "living" funds. For other emergencies, I charge to credit cards and pay it off by selling investments later in the month. If there's a market crash and I still have an emergency? I still have a month before paying off the statement and I can use my work to pick up enough to pay the minimums each month if it got that bad.
« Last Edit: December 13, 2014, 08:43:14 AM by eyem »

frugalman

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Re: Credit Card: Pay Statement Balance or Current Balance?
« Reply #14 on: December 13, 2014, 01:40:18 PM »
I Autopay the statement balance on the due date. Therefore I will never have a late payment. Also, I use YNAB with a one month buffer so I am always sure I have enough money in checking. On average, I am running about an $8,000 checking balance as a result.

Davids

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Re: Credit Card: Pay Statement Balance or Current Balance?
« Reply #15 on: December 13, 2014, 03:12:12 PM »
I always pay statement balance

Runge

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Re: Credit Card: Pay Statement Balance or Current Balance?
« Reply #16 on: December 13, 2014, 03:20:13 PM »
Mine is set up for autopayment of the statement balance on the due date. I don't write any checks, or send anything in the mail, or call anyone. It auto-debits from my checking account. I'm also a YNAB user, so the money is marked as spent the day I actually spend it. Why spend more time trying to obsess over paying the card down in full all the time? I know the money will be there when it auto-debits, so it's not worth the hassle for me to manually pay.

Zikoris

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Re: Credit Card: Pay Statement Balance or Current Balance?
« Reply #17 on: December 13, 2014, 05:01:32 PM »
I pay everything off twice a month in full. It's just way easier for me to keep track of it if I just look at Mint and pay off the number I see there, rather than figure out what the statement balance is for multiple cards. Laziness wins.

lizzie

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Re: Credit Card: Pay Statement Balance or Current Balance?
« Reply #18 on: December 13, 2014, 10:12:08 PM »
Don't you wind up paying interest if you only pay the statement balance on the due date? I think our cards start charging interest after 25 days.

Sid Hoffman

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Re: Credit Card: Pay Statement Balance or Current Balance?
« Reply #19 on: December 13, 2014, 10:56:26 PM »
Don't you wind up paying interest if you only pay the statement balance on the due date? I think our cards start charging interest after 25 days.

Interest only accrues on statement balanced AFTER the due date.

Example:

January 1st, your statement is issued, showing you owe $500, and is due January 21st.  On January 20th you log into your account which shows the statement balance of $500 and now a current balance of $750.  If you pay only $50, then after January 21st interest will begin to accrue on $450 of your now $700 balance.  However if you pay the statement balance of $500, you will still have a balance of $250 but it accrues no interest because it is not part of the closed statement.

homehandymum

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Re: Credit Card: Pay Statement Balance or Current Balance?
« Reply #20 on: December 13, 2014, 11:58:18 PM »
We auto-pay the statement balance on the due date.

We have two choices when it comes to paying for stuff
1) the mortgage-linked bank account that operates like a checking account with a large overdraft, calculates the interest owed daily, and has transaction charges
2) the credit card, that has no interest charges if paid off monthly, and no transaction charges.

So we make as many transactions as possibly with the credit card, and just pay the statement account automatically, which minimises both interest paid and transaction fees.

For my expense tracking system, I don't bother to track whether a purchase is made via CC or checking - I just record it having been made on the day, and the monthly pay-off of the CC is irrelevant (and therefore not recorded).

soccerluvof4

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Re: Credit Card: Pay Statement Balance or Current Balance?
« Reply #21 on: December 14, 2014, 08:21:07 AM »
Pay in full the day of the statement the balance

pipercat

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Re: Credit Card: Pay Statement Balance or Current Balance?
« Reply #22 on: December 14, 2014, 09:04:57 AM »
I don't even think about it. I have all of my cards enrolled in auto-pay. They withdraw the statement balance on the due date.
^^ This.
« Last Edit: December 14, 2014, 08:32:22 PM by pipercat »

BooksAreNerdy

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Re: Credit Card: Pay Statement Balance or Current Balance?
« Reply #23 on: December 14, 2014, 05:19:23 PM »
I make 2-3 payments a month, each time paying the current balance, not including pending charges.

Middlesbrough

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Re: Credit Card: Pay Statement Balance or Current Balance?
« Reply #24 on: December 14, 2014, 05:25:11 PM »
I would say that only the statement amount is the efficient thing to do. I, however, voted the whole balance because at this time in my life I don't have a high limit and only one card. For rewards, I put everything I can on the card and sometimes with work expenses I can't last the whole month without paying it off again anyway. Once I can hold a month of expenses or more on my cards, I will move to statement only.

Left

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Re: Credit Card: Pay Statement Balance or Current Balance?
« Reply #25 on: December 14, 2014, 05:31:07 PM »
hm, this goes against the normal use of credit cards, but does anyone preload their cards? I have once in the past where I went overseas and didn't want to hassle with paying the bill so I preloaded enough money so I wouldn't have one at end of the month. I don't use auto-pay so for people that do, this issue isn't really an issue.

horsepoor

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Re: Credit Card: Pay Statement Balance or Current Balance?
« Reply #26 on: December 14, 2014, 07:58:27 PM »
Usually the statement amount, but if the current balance isn't much more, I just pay it off because I like seeing those zeroes in Mint.

Joel

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Re: Credit Card: Pay Statement Balance or Current Balance?
« Reply #27 on: December 14, 2014, 08:02:46 PM »
Mine is set up for autopayment of the statement balance on the due date. I don't write any checks, or send anything in the mail, or call anyone. It auto-debits from my checking account. I'm also a YNAB user, so the money is marked as spent the day I actually spend it. Why spend more time trying to obsess over paying the card down in full all the time? I know the money will be there when it auto-debits, so it's not worth the hassle for me to manually pay.

Same here.

MrsSmitty

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Re: Credit Card: Pay Statement Balance or Current Balance?
« Reply #28 on: December 15, 2014, 12:39:08 PM »
I don't pay anything by when it's due but rather by when I get paid (2x per month). I do everything online so every payday I log into all my accounts and pay everything - all bills that have come in and the current balance on all my credit cards whether or not anything is technically due. I'm sure I'm missing some points or other card benefits by doing it this way but honestly I'm not that far removed from my debt days and seeing those zeros gives me peace of mind.

FarmerPete

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Re: Credit Card: Pay Statement Balance or Current Balance?
« Reply #29 on: December 15, 2014, 02:33:45 PM »
I'll go back and forth.  On some levels I don't like keeping debt on my CC, even if it's free.  I don't like seeing my checking accounts get that high!  I typically start paying things off and then if the balance is still higher than anticipated, I'll transfer money to savings.  Having 7k in my checking account while I owe $3k in credit card charges and have a 1k mortgage payment due in a week isn't cool.  Everything is recorded in YNAB, but that doesn't necessarily mean it's all perfect.

Cookie78

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Re: Credit Card: Pay Statement Balance or Current Balance?
« Reply #30 on: December 15, 2014, 02:42:01 PM »
hm, this goes against the normal use of credit cards, but does anyone preload their cards? I have once in the past where I went overseas and didn't want to hassle with paying the bill so I preloaded enough money so I wouldn't have one at end of the month. I don't use auto-pay so for people that do, this issue isn't really an issue.

I did this once for the very same reason. It was at a time before online banking and I was gone for 3 months and would have had no way to pay it while I was gone, so I wanted to make sure I wasn't going to be paying interest and late fees.

There may have been other ways around it, like automatic payment, but I was young and didn't really care enough about anything but avoiding credit card interest payments.

slugline

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Re: Credit Card: Pay Statement Balance or Current Balance?
« Reply #31 on: December 15, 2014, 02:43:48 PM »
hm, this goes against the normal use of credit cards, but does anyone preload their cards? I have once in the past where I went overseas and didn't want to hassle with paying the bill so I preloaded enough money so I wouldn't have one at end of the month. I don't use auto-pay so for people that do, this issue isn't really an issue.

This can work for a single month, but if you have a persistent credit balance for an extended period of time, the bank will typically generate a refund check to you to clear that balance.

seattlecyclone

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Re: Credit Card: Pay Statement Balance or Current Balance?
« Reply #32 on: December 15, 2014, 02:58:36 PM »
I have all my cards auto-pay the statement balance on or near the due date. Even though interest rates are low, that free float does have some value. My credit limits are high enough that I don't have to worry about hitting them just because I'm paying "only" the statement balance.

skyrefuge

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Re: Credit Card: Pay Statement Balance or Current Balance?
« Reply #33 on: December 15, 2014, 07:22:21 PM »
I tend to end up with an amount somewhere in the middle.

While paying the current balance seems somewhat silly, unnecessary, and sub-optimal, this (paying some amount in between) is full-on insane.

Every month you spend time and mental energy inventing a number to pay? What a complete waste.

Go to your CC's website, turn on AutoPay, select "Statement Balance" (ok, or "Current Balance" if you must), and never spend another second thinking about it for the rest of your life.

Next poll: when you sign your CC receipts, which order do you write the letters of your name in?
o Left to right
o Right to left
o A different random order every time (it's like playing a game of Hangman with myself!)

deborah

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Re: Credit Card: Pay Statement Balance or Current Balance?
« Reply #34 on: December 15, 2014, 07:40:39 PM »
Ever since it became available, I have autopaid the statement amount. It was available earlier at my bank than most. Fantastic! And it comes out of my high interest account, so I don't keep anything in a low interest account.
« Last Edit: December 15, 2014, 09:02:48 PM by deborah »

PMG

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Re: Credit Card: Pay Statement Balance or Current Balance?
« Reply #35 on: December 15, 2014, 08:39:37 PM »
I have minimum payment set up on autopay that way I know I'll never get a late fee, but I always log on and pay the statement balance the week before it's due.

Returnoftheyeti

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Re: Credit Card: Pay Statement Balance or Current Balance?
« Reply #36 on: December 15, 2014, 10:06:49 PM »
My GF and I pay for everything on the credit card, then split it 50/50. We pay the current balance every month on the 20th, which is about a week before it's due.   At this point I have no idea what the actual due date is, but we "pay the card" on the 20th and this works great for us.