Utilising a credit card for your payments on the CardUp platform allows you to take advantage of extended payment terms, effectively deferring the outflow of your cash for 30-55 days. This can provide a significant cash flow benefit for your business or personal finances.
Here's a more detailed explanation of how it works:
The length of the deferment period depends on two key factors related to your credit card:
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Billing Cycle:
- Your credit card's billing cycle determines when the payment due date falls. For example, if your cycle starts on the 1st of the month and ends on the 30th, the payment would be due sometime in the following month.
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Grace Period:
- Most credit card issuers provide a grace period of 15-25 days after the billing cycle ends, before interest charges or late fees are applied.
Let's look at an example to illustrate the cash flow benefits:
Suppose your credit card billing cycle runs from 1st December to 30th December. Your issuer then typically gives you 15-25 days as a grace period to make the payment.
In this case, you would have until 15th to 20th January to settle the payment to your credit card before any penalties are incurred. This means you can effectively hold onto your cash for 30-55 days before the payment is due.
By utilising your credit card through CardUp, you can preserve your cash reserves for an extra 1-2 months compared to making a direct bank transfer. This allows you to better manage your short-term liquidity and cash flow, which can be particularly beneficial for larger, recurring payments like rent, insurance premiums, tuition fees, and more.
The exact deferment period you can achieve will depend on the specific terms of your credit card. We recommend checking with your card issuer for the most up-to-date information on billing cycles and grace periods. The CardUp team is also happy to provide guidance on optimising your cash flow when making payments through our platform.