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I have well publicized that I changed to the Citibank’s PremierPass Card Elite Level for all my credit card purchase to take advantage of their generous mile bonuses whenever I fly. (You can read the article here if you need a refresher).However, I found that there is one major difference between my Wells Fargo Credit Card and my new card that warrants a mention here because the new citi card might be costing me money in ways I never realized until recently.
The main difference I found with my citi visa credit card is that the time between the statement date and the due date is very short. For example, my statement date last month was 7/9 and my payment was due on 7/30. This means that if I made a purchase on 7/8, I will need to pay for it 7/30. As a comparison, my Wells Fargo credit card had a statement date of around the 25th of the month, with the due date on the 23rd.What’s the big deal? Here’s a little calculation. I’m going to assume that I buy $100 worth of stuff on my credit card each and every day and the following on the due dates and statement dates.
|
|
Wells |
Citi Visa Card |
|
Statement Date |
25th of the month |
9th of the month |
|
Due Date |
23rd of the month |
30th of the month |
In the example I have given, my expenses in the month of July would be due on the following dates using the two cards:
Wells Fargo Card
$2500 due on August 23rd, $600 due on September 23rd
Citi Visa Card
$900 due on July 30th, $2200 due on August 30th.
This means that if I used the Wells Fargo Card, $900 dollars could have been earning interest for another 24 days. However, $1400 dollars actually earned 7 less days, with the rest of the $600 also earning 24 more interest days.
Summing it up, $1500 dollars earned 24 more days, and $1400 dollars earned 7 less days. Giving me a lost of $4.80 - $1.40 = $3.40, assuming that I get 5.05% APY on the money.Based on the calculation, it is nothing to worry about so I will continue to use my Citi Credit Card since the benefit is worth much more than the few dollar difference in interest.
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My biggest problem is that the short time leaves you little time (usually less than a week to get the payment in the mail). They “forget” that it takes time to receive the statement, time for the postal service to take the check to get back their processing plant, and still more time for the check to clear. Allowing for 5 days for each leg of the trip, the three legs can take 15 days of the 21 alloted days. Insane!
Lazy: Maybe you should try using bill pay since you can pretty much post it much quicker.
An even fast method is to use the tools from the credit card system itself since you can post the payment and let them worry about how long it takes to get the money.
Excellent points you’ve illustrated here, thanks Dave.
Modern Worker: Not a problem. Glad you like it.