Optimizing payments across credit cards

December 30, 2022

Having multiple credit cards can be a useful tool in managing payments throughout the month. By paying attention to the closing dates and due dates, we can spread our payments out more evenly to delay paying expenses all at once.

If we do not pay off our required balances by the due date, we will pay interest fees - depending on how much is owed per card and the interest rate, this will incur additional unexpected costs. We should avoid this as much as we can and pay off all our balances by the due date. The following examples assume there is no remaining balance due at the end of each month.

Let's say we have three credit cards - they closing dates and due dates are defined as follows:

Card Name Closing Date Rule Due Date Rule
Card X 5th day of month 21 days after closing date
Card Y 15th day of month 25 days after closing date
Card Z 25th day of month 21 days after closing date

Now let's say we have three regular monthly payments we can schedule to a card each month:

Payment Name Charge Date Rule
Item 1 7th day of month
Item 2 15th day of month
Item 3 28th day of month

Since the closing date of each credit card is followed by 21-25 grace days where we aren't charged interest, we almost have a month to pay our balances. If we look at our payment items above, each one is scheduled on a day that is either on the day of or a few days after our closing dates.

Item 1 needs to be charged to our credit on the 7th day of each month - which card is the most optimal one to use?

Card X's closing date is the 5th day of each month. If we begin with January, the next closing date for Card X is January 5th with a due date 21 days later on Jan 26th.

Card Y's closing date is the 15th of each month. Using the same starting month above, the next closing date for Card Y is January 15th. Including grace days, the actual due date for the balance on January 15th won't be until February 9th.

Card Z's closing date is the 25th of each month. The closing date for Card Z is January 25th and the due date is February 15th.

Item 1 is charged to Card X on Jan 7th, making it past our closing date of Jan 5th. This would make the closing date for Item 1 on Card X Feb 7th and our due date Feb 26th (Feb 7 + 21 days). If we charge Item 1 to Card Y, then the closing date will be on Jan 15th which is greater than the charge date. That means charging on Card Y is due on Feb 9th (Jan 15 + 25 days) - a few weeks earlier than Card X. Finally, if we charge Item 1 to Card Z, the due date will be Feb 15th (Jan 25 + 21 days) - in between Card X and Card Y's due dates.

The ideal spread of scheduled payments is the one allowing a due date to be delayed as long as possible without incurring penalties. Charges on cards that are on the day of a credit card's closing date aren't usually reflected in the balance due until the next closing date. The following shows an example of the due dates:

Payment Name If using Card X If using Card Y If using Card Z Max days from charge date Min days from charge date
Item 1 due Feb 26th+ due Feb 9th- due Feb 15th 50+ 33-
Item 2 due Feb 26th due Mar 12th+ due Feb 15th- 56+ 31-
Item 3 due Feb 26th- due Mar 12th due Mar 18th+ 49+ 29-
+ Optimal due date and total days for scheduled payment
- Least optimal due date and total days for scheduled payment

By the due dates listed above, we can see that it makes sense to put Item 1 on Card X, Item 2 on Card Y and Item 3 on Card Z. We can extend our maximum number of days from when credit is charged to when it is due by up to 56 days from the data above. In our worse case scenario, we have 29 days to pay our balance due.


The content above contains my personal thoughts only and are not representative of anything I am involved with. The following content may contain financial opinions and these opinions do not reflect any professional advice. Speak to a licensed financial professional for actual financial advice.