Playing the float

[jmjj215]

In talking about credit score and such it was mentioned that you have an advantage with credit cards of the float.

[I don't want to talk about whether you disagree or agree with that though - this is going a different direction].

I got to thinking that having my float in my checking account was worth absolutely nothing (well, virtually nothing) so I've setup an automatic transfer system with ING.

Now, if I understood it correctly, ING calculates interest daily and pays monthly - you don't need to have that money in your account end of month to get the interest on it - right? I believe some other banks do that (doesn't ED?).

So, I took our monthly expenses, which we pay 98% on credit card, and set up and automatic withdrawal the day after our credit card balance is paid in full automatically by our checking account.

Our due date is on the 5th of each month, so I'm going to dink around with the days/lag time and probably set up the automatic transfer OUT of ING for the 28th or something - kind of do a 'worst-case' scenario and give myself the most time to get the money in there to be able to pay on the 5th.

With out monthly expenses what they are (pretty low), this floating will get us $50 per year. Not really a big deal huh? But, it's something I've setup once, will monitor for probably the next three months, and then most likely forget about.

As our expenses rise, so will the money we make on the float. Right now we average about $1,800 in expenses each month so that's not much interest potential there.

This all hinges on whether ING calculates and pays interest the way I think they do.

I wrote more about it on my blog

[sweeps]

Since interest accrues daily, your monthly interest payment should be based on your average balance over the whole month. So, no, stuffing your account just before your statement posts won't do much.

Another possibility which I've seen discussed on another site is to go to your CC's web site and set up an automatic withdrawal directly from ING (or better yet a higher-yielding online bank ). That takes your checking account out of the equation altogether.

[jmjj215]

Oh, that's a good idea about linking directly to ING...

I knew it accrued daily, but I wasn't sure if they maybe looked at your ending balance as a factor - I think you miss out on interest with ED for instance, when you pull money out before the payment.