Suppose you want to make a large purchase but don’t have cash available right now but expect to in the coming months. You can use credit cards to allow you to make the purchase now and pay later. Here’s how it works:

Let’s say you want to buy something that costs $3,000. You make the purchase on the day after the statement date of you credit card (let’s say that’s 9/15). Now, if you are using a 2% rewards card per my previous advice, you will get $60 of that back immediately. The purchase will not appear until your next statement on 10/15 and you will generally have almost another 30 days to pay it (in this case the payment date will likely be 11/13). So, you have created an automatic 2 month deferral with cash back and no interest.

Let’s say you can’t pay it off on 11/13. A common tactic would be to take a cash advance on another credit card on 11/13 and pay off the balance. This would give you another almost 30 days to pay off the balance. There is a caveat here in that some banks do not allow an interest free grace period on cash advances. However, if your bank card does, you just made a purchase with no payment for 90 days interest free.

Rolling transactions such as this are nothing new and are a common cash flow tactic businesses have been using for years. However, there is no reason any individual can’t take advantage of this same strategy to time purchases and payments to their advantage.