Totally unreal finance charge

hilltop_gwOctober 9, 2009

I always (ALWAYS) pay my credit card in full every month. Last month a government agency billed me via regular mail $18 for employee driver reports which I paid via check. The office maintains a CC on file for backup but they also billed my credit card so I called the gov agency & told them to remove the charge. I thought they were going to remove the CC charge but they decided to just give me credit on my account. Anyway I'd already deducted the $18 from my credit card bill when I paid it. BIG mistake.

Since I didn't pay my CC balance in full, today I have a $16.79 finance charge. I called CC company and they said I'd also have a 2nd finance charge for next month because it fell into two billing cycles. What a CROCK!!! $33.58 in finance charges on an $18 charge that I had already paid. After 30 years with the CC company and no late payments I was furious. They did agree to remove all finance charges but I can't imagine what it would be like if a person wasn't able to pay the balance in full regularly.

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hilltop_gw

Mentioned this to my daughter who asked why the finance charge was so high ($16.79) on the unpaid $18. It's because even if a person pays all but a small portion or nearly all the card if it's not paid in full they charge you the APR on the average daily balance. New experience and lesson learned.

    Bookmark   October 9, 2009 at 11:19AM
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western_pa_luann

"I always (ALWAYS) pay my credit card in full every month."

But that month you didn't!

    Bookmark   October 9, 2009 at 12:54PM
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hilltop_gw

OK, luann, technically you're right. I should have said, historically or 359 out of the past 360 months (since I've had the card for 30 years) I've paid my credit card in full and maintained a $0 balance at the beginning of the month. This time I paid it in full except for the $18 which I'd already paid direct to vendor by check and the vendor admitted double charging and consented to credit me.

Initially I was going to just pay the CC the $18 but I didn't feel that it would be worth the cost of a stamp to pay the $18. I figured the vendor was going to credit my account anyway and even so, $18 x 13.99% APR it wouldn't be worth the cost of the extra stamp (I'd already paid the rest of the bill). I didn't realize that if you don't pay your balance in full - by even a nickle or $18 in this case, they charge you the interest or finance charge on the average daily balance which includes all purchases made that month (even though I'd paid for them). Like I said, I got all the charges removed and won't do that again.

    Bookmark   October 9, 2009 at 1:57PM
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dadoes

The lesson is do not ever deduct an expected credit/refund from a credit card payment that hasn't been posted to the account and is on the statement.

    Bookmark   October 9, 2009 at 1:59PM
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christine

I work in the credit card department for a large bank and you should always pay the amount due even if you expect a credit. A merchant has no power to 'remove a charge' once it has been processed, they have to issue a credit. Additionally the bank could not possibly reconcile charges that way - trying to match up a credit to a charge to essentially say that the charge never should have happened would be a logistical nightmare.

Lesson learned, I guess. Although I thought the 2 month finance charges had been banned by law?

    Bookmark   October 9, 2009 at 4:34PM
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Chemocurl zn5b/6a Indiana

The lesson is do not ever deduct an expected credit/refund from a credit card payment that hasn't been posted to the account and is on the statement.
I agree. Things happen, and so many people are inept these days. I have been told that a credit will sometimes take 4-6 weeks to be credited to my account. I just make a physical note that a credit is due me, and watch my statement until it comes through.

It's nice that your cr cd company listened and worked with you on getting the interest charges removed. They might not care for those of us who never pay them any interest, but they are indeed making money off the merchants when we use their cards. More than once I've had cr cd companys work with me when I had life emergencies where the due date slipped by me.

Sue

    Bookmark   October 9, 2009 at 4:37PM
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christine

Sue - they will generally forgive 1 cycle per year with both the late fee and finance charges. If you are calling every month to have them reversed, don't expect the same gracious behavior. But the general rule is once a year.

And yes, companies can be very generous during life emergencies. Verizon gave me 1000 extra minutes for free the month my mom passed away. I didn't need to up my plan, just needed a lot during that particular time, and they accommodated me quite generously.

    Bookmark   October 12, 2009 at 4:24PM
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breenthumb

Hilltop, watch your next bill to make sure your interest rate didn't get jacked up. I don't know if that was changed too in the new rules, but having one late payment used to automatically bump your rates up.

Doesn't matter much if you pay it all off monthly anyway, but hey, you never know.

    Bookmark   October 15, 2009 at 4:48PM
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joyfulguy

If you want to find out how it feels to have a heavy penalty, try writing a cheque for $5.00 and having it presented to your bank for payment when there's less than that amount in the account.

Which tells me not to agree to give a number of agencies (e.g. church, charities, political party, etc. permission to withdraw a specified amount monthly from my account.

Should three of them make such a request when there wasn't enough money in the account to cover until later that day ...

... 3 X $35.00 is a great deal larger figure than I want to give to the bank for some additional accounting!

Even should I happen to be a shareholder in that bank, so have them pay me a dividend 4 times per year.

ole joyful

    Bookmark   October 21, 2009 at 4:00AM
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