Why don’t credit cards ever drown? Because they always have a float to keep them afloat!
A little humor to start your day, but in reality, credit card float is no laughing matter—it can quietly put you one step behind financially and even lead to unexpected interest charges. Today, Chad Clark joins us to break down what credit card float is and how you can steer clear of its pitfalls.
Chad Clark is the Executive Director of FaithFi: Faith & Finance and the co-author of Look at the Sparrows: A 21-Day Devotional on Financial Fear and Anxiety.
What Is Credit Card Float?
Credit card float refers to the period of time between when you make a purchase with your credit card and when you actually pay for it. Since using a credit card means borrowing money, this float period allows you to delay paying for purchases—often up to 55 days—without incurring interest, as long as you pay your statement balance in full by the due date.
Let’s say you purchase a pair of shoes on January 1st, right at the start of your billing cycle. If your statement closes on January 31st, your payment due date might be around February 25th. This means you have up to 55 days from the date of purchase to pay off the expense without interest.
At first glance, credit card float sounds like a great deal—after all, you get to borrow money for free for a certain period. However, there’s a hidden risk: you might unknowingly be living one paycheck behind.
Here’s why:
- If you pay your credit card statement in full each month, you may actually be using this month’s income to pay off last month’s expenses.
- This creates a cycle where you always rely on future income to cover past spending.
While this system works as long as you have a steady paycheck, it can become problematic if unexpected expenses arise or your income changes.
The Best Way to Avoid Credit Card Float
To determine whether you’re unintentionally riding the float, do this quick check:
- Add up your current credit card balances.
- Subtract that amount from your checking account balance.
- If you don’t have enough in checking to cover your full credit card balance immediately, you are riding the float.
This means if you lost your income tomorrow, you wouldn’t be able to fully pay off what you’ve already spent.
To stay financially secure and avoid relying on the float, follow this key principle:
Always have enough money in your checking account to fully pay off your credit card balance at any time—not just the statement balance, but the full balance.
That way, when your bill arrives, you can pay it without dipping into savings or waiting for your next paycheck.
How the FaithFi App Can Help
Many people don’t realize they’re caught in the float cycle until it’s too late. That’