Rounding payments?

Avatar for colomom99
iVillage Member
Registered: 03-28-2003
Rounding payments?
9
Fri, 02-05-2010 - 9:09am

Good morning, I seem to remember someone posting here on the benefit of making payments to make sure balance falls under the next hundred or thousand cut off for some kind of benefit. For example if the balance is $4112 to make a payment of $112 so it falls under the $4000 mark. Could you remind me of why? I had a couple bills this month that were like that and I made small second payments but I can't remember the benefit. I'm still in the mode of trying to get my monthly minimum payments down so my budget is more managble. it will make it easier (and more realistic) as I try target one or two bills at a time.

Jenny

iVillage Member
Registered: 06-02-2009
Fri, 02-05-2010 - 3:58pm
That advice came from Mary Ann -- a super gal and EXPERT on all this stuff.
Lila
iVillage Member
Registered: 11-17-2007
Fri, 02-05-2010 - 7:13pm

When the banks figure out your interest they figure it on the daily balance you have Sometimes I personally think they make up the amount but sometimes it is pretty close to real balance. The ones that charge you interest on a larger daily balance you need to watch for. I know

iVillage Member
Registered: 06-25-2006
Fri, 02-05-2010 - 8:40pm

WOW Mary Ann this is really interesting! My husband and I have finally reached a point where we have been paying more than the minimum payment each month - usually the minimum payment plus the finance charge but now I will double check and see if even a bit more would get us down under the next $100 mark.

Also it is good to know that paying earlier in your cycle helps the next bill. Somehow - although not by design I have to admit - we are on a budget cycle that has us paying our credit card bills early in the month even though they are not due until the end of the month - this way we have enough at the end of the month for the mortgage - it is good to know that paying earlier can lead to less interest.

Every dollar counts!

iVillage Member
Registered: 01-12-2010
Fri, 02-05-2010 - 9:36pm
Yes, paying the 1st day of your new cycle does make a difference. My visa stmnt is the 11th of each month; I get paid for dayhome on the first but as soon as my statement is posted on the 11th or at the latest, on the 12th, is when I pay.
Most CCs charge DAILY interest, not weekly or monthly, and that is why it matters. That's kind of the concept of snowflaking too, I think. I NEVER pay my min pmnt of my Visa; I always add $25 or more to it.
Now I am in CA not the US so not sure if rounding payments to get under the 100 mark follows that same concept, but I think the premise is, (as PP said), every $ counts. That's why, as mentioned more than once on this board before, it is important to know when your billing cycles are.
Now, all that being said, my Visa is the lowest of our concerns and I wish we could do the same with the other but reality states the cash flow isn't there :( ...
Melissa
~ Mom to 5 ~
~ Melissa ~ ‎"We need to find the courage to say NO to the things and people that are not serving us, if we want to rediscover ourselves and live our lives with authenticity." - Barbara de Angelis
iVillage Member
Registered: 06-02-2009
Fri, 02-05-2010 - 10:10pm

Thanks again, Mary Ann!

Lila
iVillage Member
Registered: 11-17-2007
Sat, 02-06-2010 - 4:33am

Everyone has

iVillage Member
Registered: 06-02-2009
Sun, 02-07-2010 - 9:35am

OK - Mary Ann -- You got me going again.

Lila
iVillage Member
Registered: 11-17-2007
Sun, 02-07-2010 - 2:08pm

Yes if that amount you paid will cover the interest and get you under the 2000 mark next month you should see your payment go down by a dollar.


The idea is to flake the money the next day after the closing date to save interest or as soon as you can.You did good by giving them the extra money Extra money is always good but if you paid them right before the closing date then you have already been charged the interest for that month. and it is not counted as a partial payment for the month you are paying it in.


Ok example closing date is say the 5th of the month. Bank starts on the 6th charging you interest. These numbers I am making up to show the point.


6th balance is 2000 interest on 2000 is 1.02 for the day.


7th

Avatar for cl_beckymk
iVillage Member
Registered: 03-19-2003
Mon, 02-08-2010 - 7:44am
Yes, it's that "Average Daily Balance" that makes the snowflaking concept work so well.