What Is Credit Card Float And How Do We Take Advantage Of It?3 min. read
Credit cards are powerful tools that give you financial freedom if you know how to use it. To maximize the potential of a credit card, cardholders need to understand the concepts of credit cards and use them to their advantage.
One of the least taken advantages of credit cards is the free float period. Also known as the grace period, credit card float is a period wherein purchases made during a certain period will not incur any financial charges and interests.
Typically, a credit card’s floating period begins after last month’s billing cycle and ends at the current month’s deadline for payments. Credit card companies in the Philippines usually give cardholders up to 20 days to pay off their balance, which makes floating period at around 40-45 days.
However, free float is only available when you have no credit card balance in your account. Cardholders with outstanding balance will not be able to take advantage of the floating period. When a cardholder settles his bills before the due date for that month, all charges will be dropped and he will only pay for the amount of the items purchased during that time.
If a person fails to make payments before the deadline, interests will start to occur on the day the first transaction has been made, and not during the due date of the payment. Aside from interests and other financial fees the cardholder has to pay, he will also be ineligible to float his purchases on the next billing cycle, or until he pays off all his outstanding balance.
While purchases made using your card can be free from interests because of the grace period, there are transactions you cannot float. Credit card cash advance, for one, incurs all financial charges the moment you do it, and it cannot be covered by the grace period.
How To Take Advantage Of Your Card’s Floating Period
There are many ways a person can take advantage of credit card float, and float can be instrumental in saving hundreds of financial fees and penalties. If a person takes advantage of the float and pays the balance before the due date, he will only pay the amount of the transactions made and nothing else.
One advantage floating period offers is being able to maximize the duration of the floating period to pay off the debt in an installment basis. However, cardholders must keep in mind that a billing cycle’s float period ends at its due date. Billing cycle ranges typically between 20 to 30 days, depending on the type of credit card.
Another way to take advantage of the credit card float is by making money off items purchased during the float. By taking advantage of the credit card float, cardholders can make money by using the credit card, purchase items, and a person has at least 40 days to pay off the items bought.
If the current billing cycle and the credit card payment period is offset to the cardholder’s paydays, the person can call the card issuer and ask them to move the cycle and period to coincide with the payday. More often than not, banks will comply with the said request.
Keep in mind that credit card float exists to encourage people to pay their bills on time, and cardholders should fall for the vicious cycle of living from float to float every month.