After I learned to stop using my credit card for buying things and paying for expenses, I learned how to use my credit card deals for buying things and paying for expenses.
By this, I mean I realized that I can use the credit card as a tool, especially if it offers a rebate like my current card, for controlling my cash flow. But the only way this works is if I pay attention to my grace period. The grace period is the period of time between the statement date and the date that interest begins to be added to that charge. If you carry a balance from one month to the next, then it’s likely you have no grace period and interest begins accruing the day you make a credit card purchase.
If you poay your credit card in full each month, you may have a grace period between 20 and 30 days. When I started using my current card (Citibank Dividend Platinum Select) earlier this year, my grace period was 25 days from the next statement date. For example, if I purchased gas on April 17, it would appear on my statement released May 5. The due date for that statement would be May 30, and no interest would be charged until that date. This way, the cash payment for the gas expense is delayed over a month.
Citibank quietly changed my grace period on my July statement. The date of the statement was July 7 but the due date was July 27, reducing my grace period to 20 days. This deserves my attention because often my money needs to be withdrawn from ING Direct or Emigrant Direct (where it is earning interest) sometime before I transfer money from checking to the credit card.
Updated February 22, 2012 and originally published September 8, 2005.