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Multiple Credit Card Payments vs Autopay… I'm Nuts

Home Personal Finance and Budgeting Multiple Credit Card Payments vs Autopay… I'm Nuts

  • Avatar G 
    Participant
    Status: Physician, Small Business Owner
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    Joined: 01/08/2016

    I let my credit cards autopay, but I do pay the entire balance when I get property tax and insurance bills.  It is part of my financial disaster plan, knowing that I’ve minimized my liabilities.  Plus, it means less mail/email.

    At some point, interest rates will be enough to make me reconsider this, but we’re not there yet.

    #155957 Reply
    Liked by Craigy
    Craigy Craigy 
    Participant
    Status: Spouse
    Posts: 1797
    Joined: 09/16/2016

    Not just crazy, but literally throwing away money…

     

    Being able to float a month’s worth of expenses must make me at least $100 in interest (from the money that sits in my savings account, instead).

     

    You’re willing to pay ~$100 for the satisfaction of seeing a zero-dollar balance?

    Click to expand…

    …how does savings play into this? Who is paying out of their savings?

    $100/month on the amount of what you’d spend on credit? Huh? Say you have $10,000 in credit card expenses per month. You’d need to have an interest rate of 12% to earn $100 on that – I want that account. Say you earn 2% APR, the amount in question would be $60,000 to earn $100/month…and if you’re spending $720K in a CC in a year, I don’t think you’d care about either $100 in savings interest or checking your credit card.

    Honestly, I think you might have made the mistake of thinking that a 1% savings account pays 1% of the balance per month instead of 0.083% (1% APR ÷ 12 months).

    And, even then, that only shifts the paradigm by a month anyway, which isn’t much – similar to running anything through the fv equation and changing payment timing from before to after the period.

    Click to expand…

    Maybe I’ve got this confused in my head, but…

    Say for example I spend $5k/mo on credit card (putting all my expenses on it to get rewards).

    Say on average each month’s expenses get floated by 30 days.

    And say I pay the CC bill (in full) out of cash that ordinarily sits in an Ally account (making ~2% interest).

     

    5k * 0.02/12 = $8/mo, or $100/yr.

     

    I mean, sure, the full $5k balance doesn’t get floated 30 days (but expenses at the start of the period get floated more than 30 days). But my point was that this probably ends up being a non-trivial amount of money.

    Click to expand…

    I was also going to ask you to spell it out, appreciated.

    This makes sense.  It also assumes that your cash is otherwise sitting in an interest-bearing account.  My USAA checking pays almost zero.  Though I suppose if I have marginally more cash in my zero-interest checking, that will push that much more cash to my brokerage account, so it ultimately works out that I would have marginally more money out there earning interest/compounding.

    Also for what it’s worth, I think you get significantly more than 30 days of float, on average.  E.g., my last statement closed 9/18, but with the grace period, payment is not due until 10/13.  So the last few days of charges don’t quite float for 30 days, but the first charges on the statement float for almost 60.  My back of the napkin math shows an average float of 41 days.

    Again, having ~$5k of annual interest-free money isn’t going to really make a difference, but it’s definitely non-trivial like you said.  And if we ever find ourselves back in a traditional interest rate environment, this could become a substantial savings.

    I let my credit cards autopay, but I do pay the entire balance when I get property tax and insurance bills.  It is part of my financial disaster plan, knowing that I’ve minimized my liabilities.  Plus, it means less mail/email.

    At some point, interest rates will be enough to make me reconsider this, but we’re not there yet.

    Click to expand…

    Beat me to it by a minute.   😎

    LEVEL 1 WCI FORUM MEMBER.

    #155958 Reply
    Craigy Craigy 
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    I must admit I don’t understand this mentality at all. Beyond any points/cash back, the whole convenience of having a credit card is being able to pay just once a month. How does it matter if your account carries a balance if you pay it off in full once a month when due? Provided one is not overspending and thus unable to pay off. I hate debt as much as the next person, but I don’t really consider my credit card balance as debt since I’ve never not paid the balance in full.

    Click to expand…

    Just because you don’t understand the mentality doesn’t make it invalid, or crazy as another member said. I’m all for point counterpoint discussions, but being dismissive isn’t the vibe I’ve seen in this forum so far. I’m fairly new here, so maybe I’m just overly optimistic in hoping this forum is different.

    Click to expand…

    When I first read that post it did seem a little inflammatory, but reading it a second time in the quote I don’t think that was the intent.

    This forum is different.   🙂

    LEVEL 1 WCI FORUM MEMBER.

    #155959 Reply
    Liked by Zaphod
    Zaphod Zaphod 
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    Status: Physician, Small Business Owner
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    Joined: 01/12/2016

    Wow. You guys are crazy! I cant imagine thinking about my cc that much when it just pays itself.

    Your score isnt impacted (ie, enough to change loan terms) unless you’re breaking the serious thresholds of 30%+, which if that is the case with monthly spending you just need to open up a few more cards that you shred when they arrive. If it is or pushing you into bad terms, you shouldnt be using a card that much then, you’re not at that stage.

    This minutiae that makes no impact on your financial life isnt worth your anxiety, brain power or time, which you all obviously know or wouldnt be posting about. Now I understand why some might “worry” about a debt on the balance sheet and have it be annoying, well if this is the level of mental annoyance sure.

    Good luck ignoring it in the future.

    #155964 Reply
    Avatar Peds 
    Participant
    Status: Physician
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    Joined: 01/08/2016

    It also keeps my wife’s Amazon spending down knowing that I’m checking the bill…

    Click to expand…

    i think it only encourages mine……

    #155965 Reply
    Liked by Craigy
    Avatar Bmac 
    Participant
    Status: Physician
    Posts: 282
    Joined: 10/21/2017

    I must admit I don’t understand this mentality at all. Beyond any points/cash back, the whole convenience of having a credit card is being able to pay just once a month. How does it matter if your account carries a balance if you pay it off in full once a month when due? Provided one is not overspending and thus unable to pay off. I hate debt as much as the next person, but I don’t really consider my credit card balance as debt since I’ve never not paid the balance in full.

    Click to expand…

    Just because you don’t understand the mentality doesn’t make it invalid, or crazy as another member said. I’m all for point counterpoint discussions, but being dismissive isn’t the vibe I’ve seen in this forum so far. I’m fairly new here, so maybe I’m just overly optimistic in hoping this forum is different.

    Click to expand…

    When I first read that post it did seem a little inflammatory, but reading it a second time in the quote I don’t think that was the intent.

    This forum is different.   ?

    Click to expand…

    My apologies. I certainly didn’t intend to be dismissive or disparaging.

    #155969 Reply
    Liked by TechCash, Craigy
    Drop it into MD Drop it into MD 
    Participant
    Status: Physician
    Posts: 440
    Joined: 09/20/2018

    I just leave it on autopay.  We only use one card for basically everything so it is a good way to track month to month expenses.  Now I use personal capital but I left the CC on auto because I feel it is not worth the time.

    #155971 Reply
    Liked by Zaphod, Craigy
    Avatar Tim 
    Participant
    Status: Accountant
    Posts: 1789
    Joined: 09/18/2018
    It also keeps my wife’s Amazon spending down knowing that I’m checking the bill…

    Click to expand…

    My wife would kinda just say : Repeat that please. I didn’t understand the question. Just to make sure I was curious “what was purchased” not fishing for a reason.  Permission or a even a “hmmm, ok” is neither allowed and be considered offensive.

    #155993 Reply
    Avatar ITEngineer 
    Participant
    Status: Other Professional
    Posts: 294
    Joined: 05/09/2017
    Wow. You guys are crazy! I cant imagine thinking about my cc that much when it just pays itself.

    Click to expand…

    Here I was thinking that doctors were crazy busy and overbooked during the day and that’s why they are always late to appointments.

    Little did I know, they are paying their credit card bill in between appointments to maintain a $0 balance  😆

    Zaphod – I find this thread very amusing. Any psychiatrists here that can help explain this behavior to me?

    #156003 Reply
    Liked by Craigy, Peds, Zaphod
    Avatar DC Doc 
    Participant
    Status: Physician
    Posts: 13
    Joined: 10/24/2017

    I’m glad that if I’m crazy then at least I’m not alone. Prior to opening this thread I literally just paid off my balances on my autopay cards because it bugged me that the balance was zeroed out.

    #156024 Reply
    Liked by Craigy
    Avatar Kamban 
    Participant
    Status: Physician
    Posts: 2124
    Joined: 08/01/2016

    Maybe I am a bit dense here but there are 2 things I seem to discern when people talk of autopay.

    1. Autopay some expenses to the card – things like cellphone, some utilities and fixed expenses. I do that with Dish, Vonage and T-Mobile. All others want extra 3% for credit card autopay and I refuse to accede to that.

    2. Autopay the credit card balance from your bank to the credit card every month on a set date. I don’t do that since I want to reconcile all expenses before giving the credit card company the money and dispute any charges if I am uncertain. I am not sure if the majority of people do this.

    #156059 Reply
    Avatar ITEngineer 
    Participant
    Status: Other Professional
    Posts: 294
    Joined: 05/09/2017
    2. Autopay the credit card balance from your bank to the credit card every month on a set date. I don’t do that since I want to reconcile all expenses before giving the credit card company the money and dispute any charges if I am uncertain. I am not sure if the majority of people do this.

    Click to expand…

    I do this. I autopay so I never miss a payment, but each statement gets gone over with a fine tooth comb to make sure each transaction is recorded in the budget. This sounds hard but is normally complete within 5-7 minutes (since most transactions are already recorded)

    Until a couple of years ago, my Amazon CC didn’t even have an autopay option for the statement balance which was extremely annoying. Maybe it’s been 3-4 years.

    How many of you dispute charges? In 20 years, I’ve never had to disputed a single one. Am I lucky?

    #156067 Reply
    Avatar beagler 
    Participant
    Status: Physician
    Posts: 242
    Joined: 07/08/2017

    I tried getting to zero balance. The most I could move my credit score was by 5 points, usually 1-3 points. I tried doing it before my homeowners renewal since it uses credit rating.

    For me, the occasional new credit card accounts for bonuses were a bigger hit to the score. New credit cards are only worth it for more than ~$700 of value.

    Solo Internist, Midwest

    #156072 Reply
    Zaphod Zaphod 
    Participant
    Status: Physician, Small Business Owner
    Posts: 5510
    Joined: 01/12/2016

    Maybe I am a bit dense here but there are 2 things I seem to discern when people talk of autopay.

    1. Autopay some expenses to the card – things like cellphone, some utilities and fixed expenses. I do that with Dish, Vonage and T-Mobile. All others want extra 3% for credit card autopay and I refuse to accede to that.

    2. Autopay the credit card balance from your bank to the credit card every month on a set date. I don’t do that since I want to reconcile all expenses before giving the credit card company the money and dispute any charges if I am uncertain. I am not sure if the majority of people do this.

    Click to expand…

    I dont worry about number 2 because of how good the cards are about this kind of thing. For example there was some strange iTunes fraud done on my card over the course of 6 months, 5 bucks first, then 20 here, and finally a bigger one or two months later. It was like 300 total, when I noticed that it was for sure not us, I just told them and it was fixed. I try to look at things qtrly at least to make sure there arent any discrepancies that need addressing.

    I cant help but keep somewhat of a running tally in my head that alerts me to anything greatly out of normal.

    #156078 Reply
    q-school q-school 
    Participant
    Status: Physician
    Posts: 2281
    Joined: 05/07/2017

    i haven’t used autopay in like ten years.  when i needed to dispute something, it was a pain in the rear.  the credit card company said i authorized money payments, so they didn’t want to extend the normal protection.  it can be hard if you are disputing a payment to cable or cellphone service.  they wouldn’t let me undo it.  i had to cancel the card.

    ymmv

    maybe times have changed

     

    #156119 Reply

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