Taking Your Credit for a Ride can Put Extra Dollars in Your Pocket!
I call this strategy a gadget play. Gadget play is a term I borrowed from football and as all football fans know, a gadget play is one of those plays that is out of the ordinary. In other words, the opposition doesn’t expect it.
Your credit cards really weren’t designed to pay you. They were designed for you to pay them but thanks to money market funds my little gadget play produces an unexpected outcome that scores every time.
This play consists of three essential elements. One, a credit card with a grace period.
Two, a money market fund paying DAILY interest on your account balance coupled with a no minimum on the number of checks you can write against your account feature. Some money market funds will not permit the account holder to write a check for anything less than $250 and limit the number of checks an account holder can write per month to a certain low number like four.
Ideally your fund should not have a minimum check amount (the amount for which you can write the check) requirement and it should pay interest daily. These are two very important keys in this strategy because this is where you make your money. More on this later.
The number of checks you can write limit is of little consequence given the strategy’s central theme is daily interest and no minimum check amount. Therefore, this is the last I’ll mention about the number of checks limit.
Given the proliferation of money market funds, you should not experience a problem finding one to fit the strategy. I use my brokerage firm’s money market fund.
Three, you will need a firm resolve to pay the balance due by the due date. This is extremely important. If you don’t, you not only defeat the strategy but you cost yourself money instead of making money.
Your Credit Card Issuer (CCI) will then have the dollar bills you should have had sitting in your account earning you more interest. In other words, you will have defeated this bullet proof strategy.
Two dates on your statement are pertinent to this strategy. They are the due date and the cut-off date. For simplicity sake, I will make the 16th of the month the due date and the 23rd of the month the cut-off date.
The cut-off date, the 23rd in our example, is the last date in the month charges will appear for that month. In other words, anything charged on the 24th or after will appear on next month’s statement. When you receive your statement, you will see the charges you made from the 23rd (or whatever date your CCI uses) of this month back to the charges you made from the 24th of the last month and up to the last day of that month.
So, if it is June 23rd and you are looking at your statement (which you will receive the first week of July) you will see charges you made from May 24th through June 23rd.
Why?
Because, the 23rd is the cut-off date for this statement. Our example shows a statement period of the 24th of this month to the 23rd of next month. A helpful hint for those who can not see these dates in their mind is to lay out a calendar. Hopefully, that will make it clear.
Since we have the 16th of the month as our due date for this example, let’s calculate the number of days we could go before having to pay for an item charged on May 24th. Charges on the 24th give us 8 days (24 through 31 May) in May for which no payment is due on this item.
June has 30 days with the cut-off date as the 23rd but the cut-off date isn’t the due date so that means we can take advantage of the full 30 days in June. Remember the cut-off date for our statement is the 16th of July. A helpful hint is to have your statement next to the calendar. Now, laid out before you, are the dates so you can clearly see the whole picture.
Totaling the number of days: 8 in May + 30 in June + 16 in July = 54 days before any of the outstanding balance must be paid in full.
Since our payment is sitting in a daily interest earning money market fund, the item(s) we charged on May 24th are earning us interest as we use them. For example, let’s say we charged $200.
We do not have to have this $200 balance paid until July 16th so it sits in our money market fund earning us interest for 54 days.
But, and this is a BIG but, the balance must be paid by the 16th or we defeat the strategy. So, we mail the CCI a check on July 12th and it arrives, and is processed, on the 15th. Good, our account is paid in full and our credit doesn’t get a ding. All we lost was one day’s interest.
However, we may not have lost any interest and may have picked up another day or two. This happens because not all checks are paid when presented for payment. Sometimes something called float happens.
Float is simply the time between presentation for payment and actual payment. However a new law called Check 21 shortens this time if used by the bank. I have written a separate report on this law and if you want a copy, send an email to deadrun@jps.net with Request for Check 21 Article in the subject.
There you have it. You not only make a few bucks by using your credit card but you keep a sterling credit report. And, another benefit from always paying on time is some CCIs automatically raise your credit limit.
The wise and responsible use of credit can put more money in your pockets. Please perform your due diligence before trying any strategy and you will more than likely increase your standard of living.
I can be reached at the above address for consultations, speeches and seminars. Simply make the subject line: consultations, speeches and seminars and I will know you aren’t a spammer.
I hope you make a ton of money using this strategy. In fact, write me at the above address and let me know how you are doing with this strategy.
Have a great day.
Tom Koziol is Executive Secretary for a non-profit focusing on senior citizens. Visit http://www.senior2senior.org and pick up fifteen free topical ebooks and a ton of free resources just for stopping by and browsing. Email him at: tom@senior2senior.org
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