Under the Credit CARD Act of 2009, credit card companies must allow their users at least 21 days to pay off their credit card bills in any given month free of interest. However, with most credit cards, when you fail to pay your entire balance before the due date, you give up this “grace period” and are retroactively forced to pay interest on the entire month’s worth of purchases, including any portion that you were able to pay off. Under this system, falling short of paying off your entire balance, even by just $25, can result in significant amounts of additional interest on your entire balance.
Fortunately, Chase Bank has introduced a new system, called Blueprint, that you can use on select Chase credit cards to better manage your balance and lower your interest payments.
Blueprint is an innovative way to carry a balance on some purchases while still receiving an interest-free grace period on others. While the best strategy is to avoid carrying a balance altogether, this system allows you to minimize your liability when you simply are unable to pay off the entire balance in full.
Key Features: How Chase Blueprint Works
- Pay Some Charges without Interest. The main feature of the Blueprint system is that you can pay a part of your balance without incurring interest. As an example, let’s say you incurred $1,000 in credit card charges on January 1 and those were your only purchases in January. You then receive your credit card statement on February 1, and must pay the balance by February 25. If you are only able to pay $900 by the deadline, most credit card companies would then charge you almost 2 months worth of interest (January 1 through February 25) on all $1,000 of purchases since it will force you to retroactively sacrifice your “grace period.” However, with Chase Blueprint, you can designate exactly which purchases the $900 will be applied to, and effectively maintain the “grace period” for those purchases by paying off those specific purchases in time. Thus, you would only have to pay interest on the $100 you were unable to pay off. The savings are monumental. The process is easy as well: you simply have to go into your online statement and select the specific charges that you want to pay for using the “Full Pay” option discussed in the next section, and Chase will apply your payment to those line items.
- Full Pay Option. With the “Full Pay” option, you can choose which purchases to pay off in full each month in order to avoid owing any interest. This feature lets you prioritize specific purchases or categories in order to minimize your interest liability. In doing so, Chase Blueprint gives you some valuable flexibility above and beyond most credit card companies that can save you a significant amount of money over the long run.
- Split Pay Option and Payment Plans. With the “Split Pay” option, you can choose a customized payment plan for specific, larger purchases over a period of months. Chase will calculate the monthly amount you will need to pay and how much interest will be incurred over the time period you select. Thus, you can accurately see how specific payment plans will affect your bottom line. The payment plan feature is called “Finish It.”
- Budgeting Features. Chase offers a “Track It” feature that lets you create and manage your full budget. Since all credit card transactions are coded by the type of merchant processing the charge, Chase can use this information to inform you of how your actual spending compares to the budget you created. You can also analyze your purchases by category.
- Free Service for Cards with Blueprint. Chase offers the Blueprint program at no cost on its Slate, Freedom, Sapphire, and Ink cards.
- Lower Your Effective APR. When you designate a purchase as a “Full Pay” item and pay on time, those charges will not incur interest. You’re effectively lowering the total amount to which your interest rate will be applied, a huge advantage over non-Blueprint credit cards. Since your interest payment will be lower, you can think of it as having a lower APR than you’d get on a card without Blueprint.
- Goal-oriented Payments. If you’re carrying a balance on your credit card, you should already have a plan for paying that balance off. By sharing this plan with Chase, they will calculate your “Blueprint Payment” on each statement with its “Finish It” feature. This goal-oriented payment amount will be more than your minimum required payment, and if you stay on pace, you’ll meet your zero-balance goal while incurring minimal interest payments.
- Monthly Reports by Category. Most cards give you an annual summary of your purchases, broken down by category so you can evaluate your spending and your yearly budget. Chase takes this concept one step further by offering it on a monthly basis. If you’re setting your first budget or making drastic changes to your yearly plan, this feature is extremely useful.
- Confusing Designations. It can be difficult to keep track of all the features and designations. Take the time to understand the options, how they work, and how they will affect your balance and interest payments. By doing this upfront, you can get the most out of the Blueprint program.
- Budgeting Features Only Tell a Partial Story. Clearly, Chase is hoping that you use this one card for all your purchases. But if you use cash for some transactions and other cards for other purchases, then the budgeting features won’t be as useful for you. The system isn’t yet capable of handling your off-card spending.
- Temptation to Carry a Balance. The opportunity to pay some charges in full and avoid interest can help balance carriers, but carrying a balance is still a poor practice. Credit card debt is unsecured debt, which has a higher interest rate than a loan secured by your home or your car. Also, unlike a home loan or an education loan, there are no tax deductions for credit card debt. Any amount of credit card debt is undesirable, even if you have a groundbreaking credit program that helps you pay your balance. If you end up carrying a balance only because this card makes it easier for you to do so, you are not getting ahead!
For a long time, I’ve felt that it’s unfair that even if you paid off almost all of your credit card purchases, you still had to pay interest on everything. The credit card world isn’t always fair, but Chase’s Blueprint system fixes this inherent problem and offers some useful budgeting tools too.
You can use these features to pay off all of your balances sooner, but they also carry the potential to encourage you to carry a balance more often. Like any tool, how you use Blueprint will determine the benefit you receive from it. Used properly, it can help you achieve the most important personal finance goal there is: eliminating your debt. But if you’re not careful, Chase’s innovation can put you even deeper in the hole.
Have you used Blueprint on any of your Chase credit cards? Did it help you clear out your balance due, or did you find yourself in bigger trouble than when you started?