Sunday, August 23, 2015

Savings Challenge, Week 24: Pay Your Credit Card Bill Every Week

I'm still working my way through a small backlog of Bankrate Savings Challenges. Last week's is "Pay your credit card bill every week," and if you don't particularly see the point of that, well, I didn't either. Reporter Jeanine Skowronski, however, swears it has several benefits:
  1. It "helps me stay on budget" and "ensure I don't rack up an uncontrollable balance." The idea is that, when she pays her bill weekly, she sees how much money she's already spent and how much she has left in the bank. That way she can avoid making any purchase that she doesn't have the money to cover. Which is a good thing, I guess, if you're in the habit of buying things without thinking about whether you can really afford them. But I don't spend carelessly, so I'm not in any danger of going overboard with frivolous purchases...and for necessary but unexpected expenses, I have a healthy cash cushion in the bank. So this particular benefit is of no benefit to me.
  2. It lets her keep an eye on her statements and spot inaccurate or fraudulent charges. She points, for example, to a $40 purchase she made which was double-billed, which would have cost her $40 if she hadn't noticed the error. Which is, again, a good thing...but is she implying that she wouldn't have spotted this error if she had waited until the end of the month to pay her bill? Because I always make a point of going over my bills before I pay them each month (which, as I've noted, is the reason I don't use automatic bill payment), and that works fine for me. 
  3. It helps her credit rating. This is the first benefit she's mentioned that actually applies to me as well. As she explains it, your credit rating is based on your "most recent statement balance" for each debt you owe—so if you happen to rack up a particularly high bill one month, even if you pay it off immediately, as far as the record is concerned, you're still carrying around a couple thousand dollars in debt. So it's true that paying off my credit card weekly instead of monthly might nudge my credit rating up a bit. But that's not a particularly strong argument with me, for two reasons: first, if your credit score is already in the "excellent" range (750 and up), then a few extra points don't really make any practical difference; and second, the only thing you really need a good credit score for is to borrow more money, which isn't something we expect to have any need to do in the foreseeable future. Skowronski claims that excellent credit can also help you qualify for better rates on cellphone or insurance plans, but I've never been offered any such deal.
  4. Skowronski's final argument is that, if you carry a balance on your credit card bill, then you'll pay it off faster if you pay weekly, because interest won't accumulate as fast. Once again, a valid point, but one that doesn't apply at all to me, or to Skowronski herself.
So the bottom line here appears to be that, if you're a person who has had any problems with credit in the past—problems that have left you with a balance to pay off, or a habit of careless spending that you're still trying to kick, or  a less-than-stellar credit rating that you want to rebuild—then paying your bill monthly, instead of weekly, is a relatively easy way to deal with these problems. But if you're already in fine shape, thank you, then all this tip will do for you is create more paperwork, because you'll have four monthly payments to enter in your checkbook instead of one.
Post a Comment