How to Pay a Federal Agency's Credit Card Bill
This page applies to all government-wide commercial purchase cards. That includes centrally-billed travel cards, fleet cards, and other credit cards. On this page, we refer to all of these as "a credit card."
If your agency uses a credit card, you must pay the bill for that card on the date that is best for the government.
Sometimes, the card issuer offers "basis points," and paying early saves money. Sometimes, paying as late as possible without incurring late fees and penalties is best.
To figure out when to pay the credit card bill, you can use either:
- an Excel spreadsheet that automatically calculates the answer for you, or
- a formula to calculate the answer yourself
Using the spreadsheet
On the spreadsheet, you enter:
- the total amount the agency owes
- the maximum discount the card issuer offers
- the basis points the card issuer offers
(This is in your agency's contract with the card issuer.)
Excel then shows you what the government will save if you pay
- as early as possible
- as late as possible – at the due date
If paying early will save more money than paying at the due date, you should accept the card issuer's rebate and pay early. If paying at the due date will save more money than paying early, you should wait and pay as close to the due date as possible.
The spreadsheet includes an example.Download Rebate Spreadsheet
Using the formula
With the formula, you are seeing whether what the government earns in interest by holding on to the money is more or less than what the government saves by paying early.
To calculate the best time to pay your agency's credit card bill, use this formula:
- (CVF/360) * 100
To use the formula, you need 2 pieces of information:
- the basis points that the card issuer offers, which you get from your agency's contract with the card issuer
- the government's current Value of funds rate
You compare the results of the formula to the card issuer's basis points:
- Result of the formula is LESS than the card issuer's basis points — Pay as early as possible
- Result of the formula is MORE than the card issuer's basis points — Pay as late as possible
Seeing an example of the formula
Agency X has a contract with a card issuer that gives them 1.5 basis points.
Every day the agency delays paying, the agency loses 1.5 basis points in savings.
The 1.5 basis points equals a maximum discount rate of 1.06 percent
Using the maximum discount rate of 1.06%, the CVF is 6%.
To use the formula, convert 6% to the decimal .06
(.06/360) * 100
Dividing .06 by 360, we get 0.00016666667
Multiplying that result by 100, we get 0.016666667
Rounding that number to 0.0167, we have the result of 1.67 basis points for the government.
Comparing 1.67 (government's basis points) to 1.5 (card issuer's basis points), we see that the government is earning more in interest each day than it would save by paying early. Therefore, Agency X should hold on to the money as long as possible. It should pay as close to the credit card bill's due date as possible.
Purchase Card Questions
Yes. The rule defines government-wide commercial purchase cards as "internationally-accepted purchase cards available to all Federal agencies under a General Services Administration contract for the purpose of making simplified acquisitions of up to the threshold set by the Federal Acquisition Regulation or for travel expenses or payment, for purchases of fuel, or other purposes as authorized by the contract." For more information, read 5 CFR Part 1315.2(x).
Maybe. You must figure out whether the government benefits more by taking the rebate (paying early) or by earning interest (keeping the money until the bill is due). Use the interest calculator or formula to figure out when to pay the purchase card bill.