I get email from the bank to let me know the bill is issued. Perhaps your bank can do that, or send a text message?
OK, thank you! Sorry if it seems obvious.
Don’t wait until the due date (Sept 3rd). There are all kinds of ways to slip up. You might forget; the bank might close transactions are 2:00 so you’d have to pay before then, but they might not inform you directly about this. I once had a bank hit we iwth a late fee on my mortgage, when they held the mortgage and also held the account from which they were to automatically make the payment. They did it “after the close of business” and charged me with a late fee. I did scream bloody murder at them and got it reversed, but it wasn’t pleasant.
No worries there OldGuy, thanks. I will be paying it as soon as the bill is issued. I am scared to death of credit cards, that is why I have never had one. Most of my friends have been deeply in debt over them at one time or another.
Bonus benefit of using credit card over debit: rewards. The main CC I use for everything gives me 1.5-2% back; debit cards don’t give you back anything. As long as you’re paying it off every month, that’s basically a small discount on everything.
There’s no need to be scared of them. They’re a tool; you have just as much reason to be afraid of them as you would of a hammer. Can you use a hammer in detrimental ways? Of course. You could drop it on your toe or whack a hole in the wall or attack someone with it. That’s the way your friends have been (mis)using credit cards. But the strategy you’ve outlined is a good use of credit cards. By way of encouragement, I’d like to note that I’ve had credit cards from the age of 18 and almost all of my purchases go on one of my cards, and I’ve never paid a dime in interest or fees, because I pay them off every month. My current thing for the past year or so is to pay close attention to rewards categories so I can maximize my cash back, which is a nice little bonus. For instance, I have a card for restaurants and travel, a card for groceries, a card for Amazon, a card for some bills, a couple cards with rotating categories, and a catch-all card. But I don’t spend money on them that I don’t have (i.e. smash holes in my walls with the hammer).
Every card I’ve ever had sends me an email when a statement is available, but you can set a monthly reminder using your service of choice just in case your email gets eaten by the Email Monster (never once happened to me, but it’s possible). As noted above, you should wait until the statement is generated before paying the bill, otherwise it won’t help your credit much. (I pay mine in full the day I get the statement, usually.) It doesn’t matter how much you put on it, but you should note some advantages to credit cards. Rewards are one, and credit cards almost always have much more robust fraud protection than debit cards. That’s why I keep them and use them on almost everything.
Really? You find it worthwhile to have multiple rewards cards and spread purchases around on them? I only use one rewards card at a time (currently Amazon rewards card, previously airline mileage card) and put everything on that.
It’s not a major source of income or anything, but yes, I have multiple rewards cards and find the minor mental load of remembering which one to use worth the few bucks a month I get back from it. They’re all no annual fee, and I get 5% back on a fair number of categories since I started doing it. For instance, I got 5% back on all grocery store purchases for the first half of the year, because that was in the 5% category for Discover in Q1, and Chase Freedom in Q2. Now I’m back to 2% back on groceries, which I get with a U.S. Bank card.
As long as you keep that in mind, you shouldn’t have a problem with credit card debt. (We mostly learn from bad experiences, but they don’t have to be your own bad experiences.)
I’ve learned to always pay it in full every month. Some months that hurts (really takes a big chunk out of my bank account), but that is the clue to me that I need to cut back on my spending in this month.
I only have two credit cards, but I do this as well. I have one that gives a flat 1.5% rebate, and another that gives more than that for groceries and gas. I didn’t get them intentionally to have different rewards profiles, I simply got the second one because they offered by $250 in rebates if I spent $1000 in 3 months. That was free money, and only after I signed up I looked at the rewards profiles to see where it was I could save more by using my old card.
I don’t think I’ve go out of my way to look for cards that have more than 1.5% back on things other than groceries and gas, but certainly I can see it as being appealing to frugal people looking to save every last cent.
On both of my credit cards, they are set up so the statement balance is automatically taken out of the linked bank account on the due date. They are with American Express and Capital One, two of the biggest issuers, so maybe other places don’t have that as a feature. By not paying until the due date, and having made the issuer responsible for the payment initiation through their own offered services, you shouldn’t have late fees and yet get to keep your money as long as possible. Just make sure the money is actually there.
Assuming you have enough money in the bank, it’s probably best to setup your CC to auto-pay the full balance every month. Pretty much all CC companies should allow this. Log into your account and search around for something like ‘auto-pay’. You can tell the CC to automatically pay your bill from your bank account when it is due. You can typically tell them different amounts to pay, such as the minimum due, a fixed amount, or the full balance due. It’s typically best to pay the full balance so you avoid any interest. Once you setup auto pay, then you don’t have to worry about making manual payments. But you do have to make sure there’s enough money in the bank for the payment.
Does your CC have an annual fee? It’s best to get a CC without that fee, but that’s not always possible if this is your first card.
The way people get into trouble with CC is that they act like it’s free money and charge up all kinds of foolish or luxury purchases. Don’t think of it like that. Think of it more like a debit card, but you pay for all purchases at the end of the month. Keep your monthly purchases low enough so that it’s easy to pay it off.
What you might want to do initially is just use it for your monthly recurring costs like phone, Netflix, etc. Those things have a fixed cost and will be easy to budget for. The regular charges and payments will help your credit score and you won’t have to worry about it too much if you setup auto-pay.
I don’t know if all banks do this, but I have an arrangement with my bank to pay each month’s bill from my chequing account and they don’t actually transfer the money until the due date on the bill. And they still do mail me a statement every month. I charge generally a couple thou every month. I don’t know my credit rating, AFAIK, there is no right to see your rating in Canada. Or if there is, I don’t know how to do it.
Equifax Canada: Check & Monitor Your Credit Report and Credit Score | Equifax
Forgetting where I heard this, maybe Suze Orman or someone like that, but whomever it was put forth the idea that you should maintain a small balance on your credit cards rather than pay them off in full each month, I guess maybe to give the credit card companies the idea that they’d make a little money off you while you’d still bei a good risk, whereas if you pay it off each month they don’t make anything & actually lose money on you if you collect & use reward points/miles. I haven’t subscribed to that idea, & always pay off my cards in full each month to get & use the points, but am open to being educated!
If you can find it, I’d like to see the article that suggested maintaining a small balance on the credit card, just to give the issuer the idea they’re making a little money off of me. For one thing, through something called the credit card processing fees, the issuer makes a little money even if I don’t pay interest each month. Secondly, it’s not my problem if they aren’t making money off my business. If they’re not, I can go elsewhere as there are literally thousands of credit card issuers.
Suze Orman gives out plenty of bad advice, but I really doubt she would say to carry a balance on a credit card, no matter how small.