Can The 15/3 Credit Card Hack Save You Money? – Forbes Advisor

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Credit cards come wrapped in financial responsibility. Cardholders can gain rewards by making purchases then paying them off to build good credit — which will help them when applying for things like auto loans or mortgages later in life.

One potential way to help cardholders boost credit scores is called the “15/3 credit card hack.”

The 15/3 credit card hack is a payment plan that involves making two payments during each billing cycle instead of only one. Anyone can follow the 15/3 plan but it takes some personal management and discipline. The goal is to reduce your credit utilization rate and increase your credit score.

5 Steps to Follow for the 15/3 Credit Card Hack

  1. Review your credit card statement and find the date that your minimum payment is due.
  2. Subtract 15 days from your due date.
  3. Write down the date from step two and pay at least half of the balance due — not the minimum payment — on that date.
  4. Subtract three days from your due date.
  5. Write down the date from step four and pay the remaining balance (including any new charges made) on that date.

The 15/3 hack gets its name from the 15 and three days that are subtracted from the due date. Billing cycles are typically around 30 days long but keep in mind that these periods don’t always follow calendar months exactly. Refer to the credit card statement to find the payment due date and the statement date.

For example: Your statement shows your minimum payment is due December 5. Subtract 15, and note “November 20.” Pay half your balance or more by this date. Pay the rest by December 2 (Steps 4 and 5.)

How the 15/3 Hack Works

Cardholders should pay attention to both statement date and the payment due date written on each statement. With the 15/3 hack, cardholders can lower their amount owed (ie their credit utilization rate) by the end of their billing cycle — a day known as the statement date.

Credit issuers are required by law to give consumers at least a 20-day grace period to pay off purchases every month without accruing interest. The end of this period becomes your payment due date.

A statement date is the day a billing cycle ends. Remember billing cycles don’t always follow calendar months. For example, a billing cycle can be from August 12 to September 12 (the second date being the statement date). Card issuers report two things to the major credit reporting bureaus on or near the statement date: 1) Cardholders’ maximum credit limit and 2) The amount of money owed. Credit bureaus use this information (among other factors) to determine a cardholder’s credit score.

The 15/3 hack can help struggling cardholders improve their credit because paying down part of a monthly balance — in a smaller increment — before the statement date reduces the reported amount owed. This means that credit utilization rate will be lower which can help boost the cardholder’s credit score.

Can the 15/3 Credit Card Hack Save You Money?

While beneficial for some, the 15/3 credit hack works best if the cardholder pays off all or most of the balance every month. Improving a credit score will help cardholders save money in the long run since the better your credit, the lower the interest rates you’ll qualify for across all of your loans, like auto loans or mortgages.

Several factors determine your credit score:

  • Payment history: 35%
  • Amounts owed: 30%
  • Credit history: 15%
  • New credit: 10%
  • Credit mix: 10%

Payment history and amount owed (known as credit utilization when compared to total credit available) are the top two factors determining credit scores. A desirable payment history involves no late payments — but only requires that you make the minimum payment on time each month. The number of payments made within a billing cycle has zero effect on payment history. The 15/3 hack does not help by multiplying the number of payments made.

The ultimate benefit of the 15/3 hack is reducing the amount owed (and thus credit utilization) by timing the payments to occur before the statement date. Cardholders should aim to keep their credit utilization rate lower than 30% (between 1% and 10% is ideal) —on individual cards and across all credit card accounts combined.

For example, let’s say a cardholder has a credit limit of $ 2,500 and a balance of $ 1,000. Fifteen days before the due date the cardholder pays $ 500. Over the next few days, the cardholder charges $ 300 more to the card. Three days before the due date, the cardholder pays $ 750. The balance by the statement date is now $ 50. The card issuer will report $ 50 owed with a maximum credit limit of $ 2,500 (with a credit utilization rate of 2% compared to 40% —what it would have been had this cardholder not followed the 15/3 rule). If the cardholder continues to pay down the balance in a timely fashion, they will likely see a boost to the credit score thanks to keeping credit utilization low.

Keep in mind in this scenario the cardholder may still owe interest on the new charges made during the billing cycle. The 15/3 hack (or any spending plan) works best if the cardholder pays off the entire balance every month. Whether doing so takes two or more payments per billing cycle or just one, paying off the balance will prevent the cardholder from accruing interest.

Does the 15/3 Credit Card Hack Work with Multiple Credit Cards?

The 15/3 hack can be applied to one or more credit cards at a time. It’s up to the cardholder to keep track of two dates, statement dates and card balances to make the “hack” work.

Having multiple credit cards can offer benefits if each offers the cardholder different perks. For example, a cardholder can have one card used to make everyday purchases for cash back or travel rewards and another card to make large purchases they intend to pay off over time (instead of in one monthly billing cycle). The second card should ideally be one offering an introductory 0% APR or a low interest rate (10% or lower as a general rule, but non-credit-card lines of credit can be obtained for much less). The cardholder can apply the 15/3 hack to the first card and use the second card to carry a balance.

Bottom Line

The 15/3 credit card trick is just one way to make on-time payments and keep credit utilization rates below 30%. Payment history and amounts owed are the two most important factors used to determine credit scores. Cardholders who struggle to make on-time payments can try following the 15/3 hack — ideally for at least six months. If credit card issuers consistently report low balances against a maximum credit limit, the cardholder is likely to see a credit score boost. Every cardholder should spend responsibly and pay off balances in full and on time to earn the best possible credit score.

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