I used to pay off my credit cards in full every week.
12 months ago I started paying off ONLY the statement balance once a month.
What changed?
Interest rates.
I now earn 0.019% every day on my cash. (5% annual rate compounded daily.)
And I pay 0% interest on my credit cards as long as I pay the balance by the due date.
By only paying the statement balance, I borrow money at 0% and earn money at 5%.
In large amounts, it’s easy to understand.
I paid our taxes by credit card last month on 10/15 to the tune of $30k. (Ouch…sorta.)
The credit card balance isn’t due until 11/18.
That means I earned $125 of interest without lifting a finger!
I applied the same concept to our taxes last year.
The reason we owed so much in taxes is because we deliberately withheld as little as possible without triggering the underpayment penalty.
That means we earned an additional $1500 last year from NOT paying Uncle Sam or Robert California more than they absolutely required.
Money is dynamic and it pays to rechart your money mental maps when the environment changes.
If you’re still managing your cash the same way you were for the last 15 years, you’re probably missing out on some easy money.
