Leveraging the 15/3 Credit Card Payment Hack to Save Money
The credit industry has come a long way in the last few decades. Today, the average American has a better credit score than their older counterparts. Due to limited overspending and financial support from the government, average scores hit a record 710 following the first few months after the lockdowns.
However, as the world returns to “business as usual,” credit problems are surfacing once again. With more people quitting the workforce, relocating to other places, and carrying previous debt, there’s been a rapid rise in credit card cancellations, rejected loan applications, and frozen payments.
Therefore, users are looking for a better utilization strategy to improve their scores quickly. One of the popular trending solutions in the market today includes the 15/3 credit card payment hack. In this post, we’ll talk about what it is, how it works, and how it benefits users.
So, let’s get right into it.
What is the 15/3 Credit Card Payment Hack?
The 15/3 credit card payment hack is a popular strategy used by holders to optimize their credit usage. The strategy involves splitting your monthly credit card payments into two. However, instead of paying at random intervals, you make the first payment 15 days before your statement arrives. As for the second payment, you make it three days before your statement arrives.
The core purpose of this strategy is to avoid incurring interest charges on your balance, thus, allowing you to save money.
How Does It Work?
Before you can learn how to adopt this strategy, you need to learn a few important billing terms:
1. Credit Reporting
Credit reporting is when creditors share information related to your user activity with credit bureaus like TransUnion, Experian, or Equifax. The key purpose of this is to help keep credit scores updated at all times, so users use it to build a healthy report.
2. Statement Closing Date
This is your billing cycle’s last day on which creditors calculate how much you’ve spent during the period. Every card has a unique date, so make sure you check your bill or card information online via the app or site.
3. Billing Date
Also known as the due date, this is the day by which users are required to pay their credit card bills and other monthly payments to avoid penalties or interest charges. According to the law, users have 21 days to pay their dues after the statement closing date, which they can check online by logging into their accounts.
Example
For most users, understanding how the 15/3 hack works can be difficult the first time. Therefore, here’s a simple example of the hack in action.
John’s billing cycle: June 15 – July 15
Statement closing date: July 15
Due date: August 6
Current credit card balance: $1,350
John has been trying to improve his credit score for months and learned about the 15/3 credit card payment hack. So, on June 30, he made his first payment of $675 (15 days before the statement closing date on July 15. On July 12, he made the remaining payment of $675 (3 days before the statement closing date).
On July 14, he decided to spend $300 on groceries and other items. So, on July 15, his balance is only $300, which he can pay up to August 6. As a result, John was able to avoid any penalties or interest payments.
Benefits of the 15/3 Credit Card Hack
You’re probably wondering why he didn’t just pay $1,650 at once in the example above and what this strategy has accomplished. Let us explain!
You see, the 15/3 credit card hack targets two factors that impact your credit score – credit utilization rate and payment history. Let’s see how each of these factors is influenced by this hack:
1. Credit Utilization Ratio
The credit utilization ratio refers to the percentage of credit you use from your total available credit. To calculate it, you simply need to divide how usage amount by the total credit and then multiply by 100. For example, if you use $300 out of $1,000, your CUR is 30%.
Most creditors recommend keeping your CUR between 20-30%, while experts recommend keeping it under 10%. Depending on your expenses and limit, this isn’t always possible, and this is where the 15/3 hack comes in.
By paying 50% or more of your balance 15 days before your statement closing date and the remaining three days before, your net balance between now and the due date becomes zero. Therefore, you can drastically reduce your CUR in the final three days by making multiple payments instead of one big one.
Moreover, since most lenders report user balance on the statement closing date, there’s a good chance that your outstanding balance would be either zero or relatively little compared to your available credit. As a result, you should see a better credit score on your report, which could reduce your interest rate and APR as well as give you access to exclusive deals and discounts for high scorers.
2. Payment History
Your payment history accounts for nearly 35% of your credit score, according to VantageScore and FICO. Therefore, it makes perfect sense to pay your dues on time to avoid penalties and other financial issues. The 15/3 credit card payment hack makes this much less complicated since it’s designed to ensure users pay their dues three days before their statement closing date.
As a result, any other charges following that till the due date are much easier to pay back since you’ve already taken care of the major payments. Moreover, paying your dues in smaller chunks is less stressful compared to making larger one-time payments.
Other Benefits
As you can see, the ultimate benefit of this useful hack is a better credit score, which can help users save money in the long run. They can improve their loan approval chances, pay less interest on existing loans, and enjoy other perks, such as purchase protection, travel miles, and cashback benefits.
Moreover, if you use multiple credit cards, you can use this hack to keep better track of your due dates and balances since you’re paying more proactively. Moreover, you can use the hack to split your credit card usage. For instance, you can use one card for everyday purchases, such as food, groceries, gas, etc. You can use other cards for rent, utilities, mortgage payments, and insurance, among other things.
The trick here is to ensure your secondary cards come with 0% APR or a low-interest rate so you can carry a smaller overall balance at all times.
Should You Use this Credit Card Payment Hack?
The 15/3 credit card payment hack is a useful tool that can help you manage your payments better. However, there’s nothing magical about it that would help you save money. It’s a simple framework for timely bill payments.
So, as long as you follow the best credit card usage practices, such as maintaining a low CUR, consolidating debt, and increasing your credit limit, you don’t need to follow a strict payment routine as long as you avoid late payments.
However, if you have trouble staying on top of your bills, this hack can help you out by customizing a payment system that works and makes you more consistent. Some users deal with multiple monthly payments, from student loans to insurance, rent, utilities, groceries, gas, and more. As a result, it’s easier to miss keeping an eye on them.
By breaking your bill into two parts, you can make smaller payments throughout the month and keep a better eye on your transactions. You can also modify this hack according to your preference, such as 15/2, 14/5, 18/1, etc.
Wrapping Up
To summarize, the 15/3 credit card payment hack is a useful trick anyone can use to ensure they clear their credit card dues on time and keep their CUR as low as possible. Since these two factors make up nearly 50% of your credit score, it’s important to look for ways to maximize them using popular tips and strategies.
Today, thousands of cardholders struggle to make on-time payments simply because they pile up their dues into one large payment, which becomes too much to handle. By breaking it down into smaller chunks, you can release some of the financial burdens off your shoulders while knowing you’ve taken care of at least 50% of your payments 15 days before the statement closing date.
