Question: Here’s a head’s up. I almost never carry a credit card balance, but I did this year for a few months because of a veterinary bill. I bounced it between a few cards for a while, taking advantage of free transfers and no interest periods. Then I let it land on a fairly low interest card.
Last month I paid it off, sending the “new balance” amount from the statement, which included some interest, and sending it well ahead of the deadline.
Yesterday I got another bill from them for a couple of dollars. The amount was listed under “Mastercard activity.”
I called to ask about it, and the customer service person smoothly explained about revolving accounts, etc, which I understand.
She said that the couple of dollars was interest for the latter part of the month on the balance as it revolved over.
I asked if this were a new way of figuring it. It has been several years since I carried a balance, but it seems to me that in the past they would give you an amount on the statement that was a true payoff amount.
She said no, this is the way they have always done it. She said you had to pay your acount in full for 2 months running to clear out the finance charges.
I stil think this is not the way they have always done it, but am probably not going to try to fight city hall on this one. It’s hard for me not to suspect that this was implemented as yet another way to keep people caught in finance charges. If I had used this card again, while assuming I had paid it off, whatever I charged would have been subject immediately to finance charges, since I was “carrying a balance.”
I asked whether one could call in advance and get a payoff amount. She said that they would give an “estimated” payoff amount, because they wouldn’t know about account activity in the weeks between the arrival of the bil and the due date.
Well, duh. That’s true of any bill they send you. Also duh that they don’t know exactly what day your payment will arrive. But they are perfectly capable of computing an amount that would pay off the account if received by a certain day, and if there were no other activity.
Answer: As I suggest above, you could call before you pay and then ask exactly what you’ll need to pay. As (if I recall correctly) another poster suggested, you could also overpay by a few bucks, just to be on the safe side.
If you don’t want to call or do any of the above, just paying off the entire amount on the statement would take care of (at worst) almost all of the amount owed. If you paid the entire amount on the statement, I think at worst you’d only owe a little money in the next statement, which would be easy to pay off.
BTW, at least several times I’ve paid off the entire amount on a credit-card statement and the next statement showed I owed nothing. Your comments may be correct, or maybe I don’t understand something somewhere, but the above is my experience. …unless the interest rate is based on the *previous* month’s balance, if the new balance was not paid in full as of the due date.
Credit card banks have many tricky ways to extract additional money from their cardholders. The good news is that these traps are always spelled out in Cardholder Agreements. The bad news is that almost no one reads all the legalese, in ultra-tiny print, that those small inserts contain when they arrive in the monthly statements (along with ads for Chia Pets, debt consolidation loans, and the like).
One of my favorites is the referenced trap which specifies that interest rates are calculated on the previous month’s balance if the current month’s balance is not paid in full. So let’s say you are one of us who pays the total balance due each month, but you are about to go on vacation and your statement has not yet arrived (and some CC companies have a habit of *losing* your statement). So you call them, get an *estimate,* and calculate what the balance should be. And then you pay that amount. But your payment doesn’t quite cover the balance as it is ultimately later calculated by the credit card company.
Three weeks later you return from your vacation (the due date for payment of the old full balance to avoid extra fees and penalties has just passed) and think all is well. But the following week your credit card statement arrives and shows that a very large interest charge has been assessed because you didn’t pay the full balance with your last bill. And that charge just happens to be calculated on the largish previous months bill, now two months back, which WAS paid in full. Gotcha!
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