I generally pay my credit card balance in full twice per month. Why? There are several reasons. They include interest, fees, and liquidity.
I try to never withdraw money from my savings except for school payments, which are quite large. I feel that if I cannot pay my credit card from my checking where my direct deposit goes, I am spending too much. I pay my credit card every pay day so I know I will have the checking account liquidity to cover it. That is the primary reason I pay twice per month: liquidity (and de facto spending cap).
The second reason I pay in full twice per month is to backup myself in case I forget to pay. I do not have my card on automatic payments, so I have to go on to the website and click pay when I want it to happen. One time I forgot. It happens. But, unlike most people, that did not cost me a fee or interest. I had already paid once in the month and paid a few days later without any late payment fees, credit report marks, or interest charges.
The third reason is interest. This is more about paying in full than paying in full twice per month. If you pay your card off, in full, every month, you don’t pay interest. I have never paid a penny of interest on my credit cards. I like it that way.
You do not have to pay twice per month by any means, but it works for me. It might work for you too. Either way, pay it off in full so you do not have to pay interest. If you cannot afford to pay your card off in full, you are buying things you can’t afford. I promise you that there are ways to either make more money or cut your spending. You don’t “need” a lot of what you buy. Remember the Starbucks factor? Spend what you can afford and save money. It is that simple in the credit world.
P.S. HAPPY CHANUKAH TO JEWISH READERS (aka People Like Me)
