by Barbara Frew, author of
Personal Finance for Overseas Americans:
How to direct your own financial future while living abroad

      The holidays are over and chances are many of your holiday credit card bills will arrive late. Many credit card companies have reduced their grace periods from 30 days to 20 days making it more difficult for overseas Americans to pay their credit card bills on time. Further, nearly all U.S. credit card companies charge a late fee.

      This is a good time to consider how you can pay those bills on time and avoid any unnecessary charges. Because you cannot rely on a statement to remind you when its time to pay a bill or to tell you how much you owe, you need to create your own system of determining when a bill is due and what you owe. For credit cards that system involves knowing your billing cycle and keeping track of your charges.

      To keep track of your charges, save your credit card receipts and note catalog and Internet purchases. Your record keeping system can be as low-tech as writing the date and amount of each charge on a piece of paper or as high-tech as recording your charges electronically with a personal finance computer program. You will use your records to determine how much you owe later.

      To determine when a bill is due, you need to know your credit card's billing cycle. Often, credit card billing cycles are 30 days long, with a grace period of 20 days, meaning the bill is due 20 days after the close of the billing cycle. To learn what your billing cycle and due date are read the fine print on your credit card agreement or a previous credit card statement. Mark the close of the next billing cycle on the calendar.

     After the close of that billing cycle, tally the charges you made on that card during that billing cycle. Since many of your charges will be in local currency and we pay U.S. credit cards in U.S. dollars, convert your local currency charges to dollars using the current exchange rate from a local paper. This gives you a good estimate of the amount you owe on your credit card during that billing cycle. Add a buffer of $25.00 to guard against exchange rate fluctuations that may affect your bill. Mail your check, with the account number written on it, to the credit card company in time to arrive before the due date. There is no need to wait for the bill. With the check include a letter containing your account number, the amount of your check and the billing cycle due date for the payment you are making. If you are using a bill paying service instead of mailing checks, authorize payment at least five business days before the due date to insure that your credit card account is credited in time to avoid finance charges.

      When your bill does arrive, keep the bill stub to use the following month. Use the billing statement to reconcile the purchases amounts you have paid with those that were actually charged to determine your account balance at the close of the billing cycle. Normally, this leaves you with a small credit, meaning you have overpaid. This is preferable to underpaying, since you will incur finance charges at high interest rates on the amount you still owe.

     At the end of the next billing cycle take the stub you saved, change the printed due date to the new billing cycle's due date. Replace the printed amount due with the new amount due (determined by adding your charges during that billing cycle) and mail the modified stub with your check instead of a letter. You can repeat this process indefinitely, replenishing your exchange rate buffer by slightly overpaying a bill if the buffer gets too small.

      If you already track your credit card spending you can pay your credit card bills on time this month and every month regardless of whether or not the bill arrives in time to meet the due date. If not, start tracking your spending now to avoid late fees and finance charges beginning next month.

 

To learn more about this and similiar topics, read:

Personal Finance for Overseas Americans: How to direct your own financial future while living abroad
by Barbara Frew

As an American living overseas your finances are complicated by U.S. and foreign laws and practices that affect everything from buying insurance to buying mutual funds. To make the financial choices that are best for you, you need information pertinent to your life style. Personal Finance for Overseas Americans provides that information along with sound financial strategies and methods that work for the long term.