Shopping for Your Line of Credit – Part 5

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Shopping for Your Line of Credit – Part 5

Templates for Your Use

As I have done in my last few posts, here are templates that I’ve designed to help you get started.

To help you identify the steps to get started and easily track your progress, I created a simple list of action items called Your Next Step Checklist.

To keep track of the features offered by financial institutions in your area, use this second template called Your Line of Credit Shopping Comparison.

Why Do I Need to Know the Billing Dates for my Line of Credit?

Today, you have extra cash sitting in your checking account and it’s doing nothing for you. Our goal is to keep your cash always working for you until you use it for its intended purpose. To minimize your average daily balance, you want to move your income to your line of credit as close as possible to the first day of your line of credit’s billing cycle and you want to make withdrawals as close as possible to the last day of your line of credit’s billing cycle. To plan the dates when you will pay your expenses, you need to know the beginning day of your bank or credit union’s billing cycle.

In my examples, the billing cycle begins on the first day of the month and ends on the 30th day of the month. This makes it easier to visualize. In real life, few financial institutions use a first of the month billing cycle. Consequently, once you’ve chosen the financial institution that you are going to use, you need ask them if you can choose the dates for your line of credit’s billing cycle.

What to Expect When You Call Your Bank

Once again, be prepared. Banking staff is rarely asked this question. They may even put you on hold while they find out this information.

You’ll get any one of the following answers. First, you’ll be given one of two dates that you can choose. Second, you’ll be given a date with the option of changing the date later for your convenience. Lastly, you may be given a single fixed date that can’t be moved.

So, if the billing cycle begins on the 5th, the closing date will be on the 4th of the following month. These are the dates that they will use to calculate your average daily balance. This means on the 4th of the following month you would want to shift your payment dates and make additional loan payments to your mortgage.

Making It Easy to Predict Your Closing Billing Date

Frequently, people struggle with understanding their opening and closing billing dates. Let’s take a few examples. We know that if the opening date is the 1st, the closing date will be the 30th. Similarly, if the opening is the 2nd, the closing date will be the first of the following month. If the opening date is the 3rd, the closing date will be the 2nd. Do you see the trend? Use scrap paper and continue the sequence for the rest of the month.

In my next post, I’ll discuss what to do if your bank also is the holder of your mortgage.

Ready to start your journey towards financial freedom? Get started today!

I’d love to hear from you. Please send your questions, topics or suggestions to dennis@cashmapconsulting.com. Thanks!

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