How to Legally Get Up to 30 Extra Days to Pay Your Credit Card BillsIt seems simple enough.

So simple that you've probably overlooked it.

I know I did.

This little trick I'm about to reveal to you never even occurred to me until I switched to using my American Express (AMEX) card as my primary spending card.

I started using AMEX as my primary card because I wanted to be forced to pay off what I charged each month. This way I avoided an ever-expanding revolving balance.

In case you're not familiar with how American Express works, let me explain. With most credit cards you're allowed to carry a balance from month to month...AMEX is different. Most of their cards require you to pay your complete balance at the end of the month.

Credit Cards vs. Charge Cards

You see, technically, the classic American Express card is a charge card, not a credit card. And even though almost everybody uses the terms "creditcard" and "charge card" interchangeably, there are important differences.

Here's what you need to know...

Basically, most credit card accounts allow you to carry a balance from one billing cycle to the next; however, you have to pay interest on that balance. Usually, you have to pay at least a certain amount of your balance each time you receive a bill.

A charge card is a specific kind of credit card. The balance on a charge card account must be paid in full when the statement is received and cannot be rolled over from one billing cycle to the next. Because you can't carry a balance, a charge card doesn't have a periodic or annual percentage rate (APR).

The two most popular charge cards are offered through American Express and Diners Club®.

A charge card can be a good way to discipline yourself to pay your bills monthly

Here's how it worked for me...

As I began using my AMEX card, it created a new reality for me. It held me accountable for what I was spending each month. It's easy to lose track of how much you spend every month if you use a credit card for everything. (I haven't used a checkbook in years...just one charge card and one credit card.)

One time I purchased an expensive item on my AMEX. I thought the bill wouldn't arrive until the next statement and I knew I would have 20 to 30 days to pay it.

I was wrong.

The expensive charge showed up on my very next statement that my wife received a few days later (not good). You see, when I made my expensive purchase (a new 15.2" Apple® PowerBook® computer with a mighty 2 gigabytes of RAM), I "conveniently" forgot to tell my wife about it. An honest mistake...

Needless to say, I was quite surprised that a purchase I made could show up on my statement only four days later.

The importance of the statement cut-off date

So I called AMEX to find out when the statement cut-off date for the account was. They told me my billing date was the 23rd of each month. Each lender seems to call the "statement cut-off date" something different. The basic idea is that it's the last day that charges will show up on your next monthly statement. For example, if you buy the new incredibly small iPod Shuffle from the Apple Store on the 23rd, and your statement cut-off date is the 24th, your next bill is going to show that charge. If you had waited until the 25th to buy it, you (and your wife) wouldn't have seen the purchase for two statements.

By purchasing right after the statement cut-off date, I get 30 days until it appears on my bill, and an additional 20 to 30 days before I have to pay that bill.

You can do this too...with all of your revolving credit cards...even though each lender's terms will be slightly different. All you need to know is the statement cut-off date on each of your credit or charge card accounts. Simply call the customer service number on the back of each card and ask. Print your list out and place it with your credit cards. When you consider an expensive purchase, you'll be able to create a game plan with just a quick glance at your list. Some people I know just put a sticker on each of their cards with their cut-off date printed on the sticker. Find a way that works for you. It's just a little trick to help you think strategically about your credit.

Of course, we're not talking about using this technique to purchase a new book (like Do You Make These 38 Mistakes With Your Credit?)or your favorite drink at Starbucks™. Those are little purchases that you shouldn't have much of a problem paying off. I'm talking about things you purchase on credit that make you think twice about how soon the bill will come due.

An unexpected surprise that's saved me thousands of dollars...

There's something else that happened during the time I waited for the cut-off date to approach so I could buy an expensive item.

A few of the items I was waiting to purchase, I no longer wanted when the cut-off date came around. It was almost as if I had buyer's remorse before I even bought the items. The desire to have the expensive "investment" (my wife would say overpriced "toy") was no longer there. In other words, during the time I waited to purchase the item, my emotional reason for wanting the item was replaced with logic and common sense. So, just establishing a "cooling off" period has really saved me thousands of dollars.

I have a friend whose wife uses the same approach when deciding if she should eat dessert. She'll finish dinner and wait 15 minutes before she decides whether or not to eat dessert. More times than not she isn't in the mood for dessert after waiting.

The lesson here is: think about the purchases you make. Don't emotionally rush into things. Consider applying for a charge card when your FICO credit scores reach 700 (be sure your discharged bankruptcy doesn't affect their lending decision). A charge card will force you to pay off the complete balance monthly and prevent you from going into debt by carrying a balance. It works for me!

And if you don't have a charge card right now...manage your credit cards like a charge card. Not only will you see your FICO credit scores increase by paying off your credit cards each month, you'll begin to master your cash flow.

The Master Creditor List

All right, since you're calling each of your credit and charge card lenders to discover your statement cut-off dates, consider taking it one step further by creating a master list of all your credit accounts. A master list of all your credit accounts is helpful in many ways...

1. If your credit cards get stolen you'll have all the information in one place so you can act fast.
2. If you become a victim of identity theft you'll also be able to act fast for the same reason.
3. If you keep the list updated each month, you'll have an accurate picture of your total debt.
4. You can easily remember which card has your lowest interest rate and use it more often than the others.
5. By tracking your credit limits and balances on each account you'll have an accurate picture of your utilization percentages, which greatly affects your FICO credit scores.

You'll just need to collect two additional pieces of information to have a really useful spreadsheet of all of your credit accounts. You'll need to know your current:

1. Credit limits
2. Account balances

In closing, when you have all of this credit information in one place you should keep it secure.

Stephen Snyder is the founder of the After Bankruptcy Foundation a non-profit organization that provides free bankruptcy information and recovery steps. Stephen also writes a free weekly newsletter on bankruptcy recovery. By Stephen Snyder
Published: 1/5/2007