I hope this isn't too stupid a question. 
Say I have 2 cards carrying a balance with one having a slightly higher interest rate. Also, say I have a monthly utility that can be paid in cash or credit.
Which is better?
Option A: Use cash to pay utility every month
Option B: Charge utility to low int card and use extra cash to pay down high int card faster?
@watch44 wrote:I hope this isn't too stupid a question.
Say I have 2 cards carrying a balance with one having a slightly higher interest rate. Also, say I have a monthly utility that can be paid in cash or credit.
Which is better?
Option A: Use cash to pay utility every month
Option B: Charge utility to low int card and use extra cash to pay down high int card faster?
My Answer: Go with Option "B"
I like to have all of my monthly utilities automatically charged to my low-interest / cash-back credit cards, for a couple of reasons:
1. It eliminates the possibility that a utility payment will be late or forgotten (thereby preventing a late payment fee).
2. It keeps the credit card account in active use (improving your chances for auto-CLI in the future).
3. It provides an automatic safety cushion, so that emergencies and temporary cash shortfalls will not result in interuption of the utility service.
And - if it becomes absolutely necessary, a prolonged financial hardship can be survived for a much longer period of time, without having vital services disconnected (provided you can still make the minimum payments on your cards).
If you are going to have to make recurring payments to the utilities, anyway - you might as well simplify your life, by enrolling in the auto-pay option, and run all such expenses through the credit card.
Thanks for pointing that out, user5387.
@Creditaddict wrote:no grace period usually would apply to cash advance or some sub prime... OP has Navy cards and a capital one.... If you are using the 2.99% BT currently on the Navy card I would try not to charge on top of that because your minimum payments will go to pay the lower interest rate first and then any payment over minimum will be applied to the higher rate....
I would use credit card B to pay Util. if that helps you pay more on the higher interest rate credit card A... just make sure that you are applying extra and accomplishing what you set out to do instead of just racking up more credit card debt because of paying util. with it instead of cash and not paying more on card A.
Even Navy uses the Average Daily Balance method of charging interest, so yeah, it's as user5387 said, any new purchases while carrying a balance do not get a grace period.
And I can't do the 2.99% BT since my balances are on the Navy cards. Doh!
Option B it is. I worked the Excel and I should have the high int card paid off by June or July. Wish me luck!