This week I received my credit card statement. Yes, I know what joy and bliss. Most PF bloggers would be all excited to open that statement, pay it in full by the due date and shout BOOYAH! Not me. No Jim Cramer Mad Money “I’ve just picked an awesome stock” moment. Nada. I didn’t open it until a day and a half later out of sheer terror. Stephen King type terror, I might add. It brought me back to my past, where I dreaded most bills. I was so deep in debt, I was constantly anxiety ridden. This bill was a whopper (more about that when it’s month end recap time).
You charged me interest?!
Yep, the good ol’ credit card peeps decided it would be fantabulous to charge me $43.67 interest. Forget about the balance of $6,782 owing, I want my $43.67 back dammit! It always irks me when they charge me interest. I suppose it is my own stupidity for paying them in little bits throughout the month instead of all at once. So, I called, informed them I made the full payment (albeit in small bits), I received the obligatory “let me see what I can do” and wham, presto, moments later the interest was credited. With a gracious thank you to the rep, I was on my merry way. One battle down, on to the next…
I have a new plan, Sam
I don’t know who Sam is; I just wanted to be all-poetic. To avoid further confusion for myself and for the credit card peeps, I have a new plan on paying my bill in full. If you don’t cover your own arse, no one else sure as hell will. My new plan is the “Maximize MY interest NOT YOUR interest” plan. I have no idea why I didn’t do this before. I blame it on social media; it’s frying my brain and can be quite addictive. Most times, I don’t know which way to turn, but let us get back to the plan.
THE PLAN IS…
Take every extra penny I receive from my paychecks and expense check each month and sock it away in my TFSA until it comes time to pay the credit card man. I will ensure I transfer the money five days before the bill is due. It will take two days to get into my regular chequing account, then another two for transfer to my credit card bill.
Editor’s Note: Thank you to Cassie at Tales from the Trenches for reminding me that I shouldn’t use my TFSA for this! It will use up my TFSA limit for savings that are not long term. I’ll be using my High Interest Savings Account instead to do this.
Devilishly simple isn’t it? Yes, its child’s play and I should have done this much sooner like all you other keeners. Who knows why I liked giving the bank my hard-earned money earlier than they deserved it. Sheesh… *shakes head*
Always check your credit card statements! If you’ve been charged interest and believe it’s incorrect, pick up the phone and call your card company. Don’t sit around thinking “oh maybe they’re right”. They make mistakes too! It takes 5 minutes to call and get your money back.
For the Naysayers
All right, I’ll play devil’s advocate for a minute – how much interest am I really going to make? Come on; is it even worth it to go to all that work of transferring things all over the place for 25 cents?
Well, yes. That is the wondrous beauty of compound interest. More money, more interest. Although, yes you’re right, they will only pay me interest compounded daily starting on the day the money is transferred.
Let’s do some math…
Take one of my expense checks which we will say averages $500. I put that money in my TFSA for a minimum of 2 weeks and the rate is 1.4% compounded daily.
M = P( 1 + i )n
M is the final amount including the principal.
P is the principal amount.
i is the rate of interest per year.
n is the number of years invested.
M = 500(1+.014)0.08 = $500.58
The above calculation represents leaving my money in the account for a full month, which may be possible if I’m a smart goose and submit my expenses super quick. My credit card bill is usually not due until the second week of the following month.
I suppose I am nickel and diming as 58 cents is relatively small. When you consider it takes little effort to click a button and transfer the money, I believe I’ll take that extra 58 cents. If I sock away $1000, I might just make a whole buck! 🙂 ($1.17 for the smarty pants out there)
Would you do the transfers for 58 cents? Have you been charged interest on your credit card and called your bank on it?
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