What is a Credit Card Float?
The term Credit Card Float has two general meanings:
First, the most widely used, generic definition of a credit card float refers to the cushion or “float” of time between when you make a charge to your credit card and when the money is actually due (when you have to pay the credit card bill). This float period can be anywhere from 21 to 52+ days. This variance in time has to do with where the purchase date falls in relation to your card’s billing cycle and statement due date.
The second meaning of “float” refers to the use of a credit card to cover some portion of your everyday expenses today with the full intention and expectation of being able to pay the card’s statement balance in full by the due date — but doing so because although you will have the money when it is due, you do not have it right now.
It is this second definition that I am referring to any time I write about or refer to credit card float or riding the float.
Why Does It Matter?
In very simple terms, it matters if you are riding the float because you are very literally borrowing against your future income to pay for current expenses. Even if you are not paying any interest or monthly fees, if you are riding the float you are in debt.
It bears repeating: If you are riding the float, you are in debt.