Vent-I finally get why people are so upset about CC issues

[Suz D]

I'm so irritated that I just had to vent to all of you budget conscious people. We have two CC's with balances. One is a Best Buy card with three years no interest so I pay 1/36th of the amount charged every month. Although I have the $$ to pay it in full I'd rather leave it in the bank. That's all well and good.

The other CC is our Disney Visa. We almost always have a promo rate for a trip so I just deduct the amount of the promo rate and pay the rest of the balance in full (and sometimes add a few hundred to whittle down the promo balances). I check my charges online to watch for fraudulent charges (someone bought a computer once with our card) but don't look at my statement until about a week before the payment is due.

I looked at the statement today to pay the bill and I was charged $19.68 interest on this bill. What the heck?! Well, unfortunately I added up the eligible promo charges (original amount) instead of the balances (current amount) and underpaid our card by $46.84. I was charged interest on $1600+ so I called to find out what that was all about.

I'm sure I'm not the only person who didn't realize this, but once you don't pay your balance in full you no longer have a grace period on your future charges. GRRRR! So I was charged interest for anything that was charged between the time the payment was received and the next billing statement was sent AND will be charged interest on my next statement from the time that billing cycle started until the date the payment was received on those previous purchases PLUS the new purchases that I've made. (I paid it instantly when I found all of this out).

So, lessons learned...

1. check my math
2. check my statement
3. and for everyone else that didn't know...if you never pay your balance in full you never get a grace period. Unfortunately I use the Disney Visa for everything so it always has a large revolving balance.

Hope others who didn't understand this will learn something too. Well, I've vented and now I'm off to enjoy some fresh air.

 

[deerhart]

realize that those grace periods are probably going to completely disappear with the new legislation that went into affect.

 

[churchpilot]

Hope you are enjoying your sunshine! You must not be in Georgia because we are being rained out!

 

[Suz D]

realize that those grace periods are probably going to completely disappear with the new legislation that went into affect.

I really needed (and need) to pay more attention to the legislation. I just assumed it didn't apply to us because we always pay our balance in full. Does this mean that even people who pay their balances in full every month will have to pay interest because there isn't a grace period? I thought the CC reform was supposed to benefit the consumer? I feel so clueless!

 

[Green Tea]

realize that those grace periods are probably going to completely disappear with the new legislation that went into affect.

I think the reform guarantees a grace period.

 

[4 Ears]

For the most part you have 25 days to pay your bill in full FROM the date your cycle/statement closes to avoid finance fees.

 

[deerhart]

everything that I have read (and I have not read the actual legislation, just the summaries as I don't really want to put myself to sleep) is that there is nothing in the law to protect grace periods. Rather, many have thought that one of the responses to the law would be the elimination of grace periods and have all balances start to accrue interest immediately instead of after so many days.

Now the law does state that if there is a grace period the following apply
# Prohibits card companies from charging interest on debt that is paid on time during a grace period. This prevents the "double-cycle billing" practice.
# Prohibits card companies from assessing fees on the remaining interest-only balance of a cardholder who has paid his/her bill on time.

But nothing in the law states that a grace period MUST exist. So the company can follow the new rules by giving notice of the change of the removal of the grace period.

 

[DOPEYLUVER]

Seems the lawyers that work for the banks are waaaaaaayyyyyyy smarter than the legislators that are "protecting" us.

 

[deerhart]

probably not, but the trend of legislatures BEING lawyers has gone down dramatically. And when non-lawyers are writing bills and such, well they don't fully understand how the whole legal system works and they leave huge holes.

Also, legislatures have to write bills that are broad enough to attempt to cover lots of things that people would never think of, thus they tend not to be very detailed and again leave huge holes or things that the courts have to answer.

Also, you have to right a bill that you can get passed. If you can't generate the votes for a bill that states their must be a grace period, then you leave it out and use what WILL get approved.

 

[Praying Colonel]

"You play with snakes, you're gonna get bit."
--Dave Ramsey

 

[Suz D]

"You play with snakes, you're gonna get bit."
--Dave Ramsey

???

 

[ceecee]

For the most part you have 25 days to pay your bill in full FROM the date your cycle/statement closes to avoid finance fees.

That's the way it is now. I didn't think that had changed...no more CC for a lot of people if they took away the grace periods. I wouldn't want to pay interest on day one charges.

 

[Praying Colonel]

OP, Dave (a personal finance guy) is not an advocate of credit cards, to put it mildly. He often uses that quote when people who thought they wouldn't have any problems with credit cards end up with problems, usually by accident. Wasn't directed at you personally, sorry.

 

[Crystal824]

I noticed this too. We always pay our Disney bill in full from the prior month. For example, last month the satement was 732.00. I paid 740.00 because I knew we had charged other things after we received the bill so I just rounded it off. When the bill came this month, I had charged 800.00 and I plan to pay that in full when this bill is due. For the first time, I had an interest charge of $14.00 due to the new purchases or revolving credit line.

Guess what, I won't be using my Disney visa anymore. The small amount of rewards isn't worth the interest charge.

 

[mickeymom1]

OP I feel your pain!!! I did something similar last year. I always pay off the bill each month in full too, but usually have a 0% promo on the bill that I subtract. I made a dreaded math error by less than $5 and I had finance charges on 2 bills because of it. Now I definitely double check my math!!

 

[henri + katie's mum]

I'm sure I'm not the only person who didn't realize this, but once you don't pay your balance in full you no longer have a grace period on your future charges. GRRRR! So I was charged interest for anything that was charged between the time the payment was received and the next billing statement was sent AND will be charged interest on my next statement from the time that billing cycle started until the date the payment was received on those previous purchases PLUS the new purchases that I've made. (I paid it instantly when I found all of this out).

I didn't know that either! Thanks for the "bad" news. At least now I know.

 

[runwad]

I always pay my bill in full have one due 3/14 no finance charges

 

[ohlas]

For the most part you have 25 days to pay your bill in full FROM the date your cycle/statement closes to avoid finance fees.

the only way to balance this out is to lower your limit, so it will not effect the pay off every month people most of the time.... but that is my bet of what they will do to cover their butts plus say goodbye to the non yearly fee cards it hello fees again

 

[Suz D]

I always pay my bill in full have one due 3/14 no finance charges

What happened with me was that I made a math error and underpaid by $47.00. Instead of having finance charges on the $47.00 I got finance charges on a prorated amount based on payment date. That means that I was given a finance charge on $1600+. In addition to that, I am now acruing interest on anything I've charged since then instead of having a grace period.

For you, if you always pay your bill in full and don't make a mistake when you subtract your promo amounts out of your statement balance, you will never get a finance charge as long as it's paid in full by the due date. But if you short your payment in full even by $1 you will receive a finance charge for two months.

 

[Suz D]

OP, Dave (a personal finance guy) is not an advocate of credit cards, to put it mildly. He often uses that quote when people who thought they wouldn't have any problems with credit cards end up with problems, usually by accident. Wasn't directed at you personally, sorry.

Thanks for clearing that up. I think Dave offers one of the best ways to get out of debt so I knew who he is, but I did think the comment was directed at me (wasn't offended but was more like, "Wow, I thought I'd pretty much stressed that we were very responsible with CC's. What's up with that post"). You bring up a very good point though...even people who are really responsible with their credit can end up doing something stupid.

Enjoy your day! It's beautiful here this morning. Spring has finally sprung!