Credit Card question

[lupi]

So I receive my CC statement and send in a check for the full balance. Next statement comes and it shows the only balance is a newly applied finance charge. Am I right to think WTF, or is there some devious fine print I missed.

 

[mzkhadir]

its delayed interest or wading interest.

I forgot the name of it. They just had a senate hearing on it.

 

[SoulAssassin]

I'm assuming you were revolving (ie didn't pay in full) the previous month so finance charges were accumulating. Basically the way it works is the balance on the statement then is the balance as of the day the statement was mailed, you were accumulating finance charges on a daily basis so the remaining amount is from the day the statement was mailed to the day your payment was received. You may be able to get it waived if you call in and bitch loud enough though they have every right to tell you to go pound sand.

<-worked for a cc company for 8 years

 

[SoulAssassin]

Originally posted by: mzkhadir
its delayed interest or wading interest.

I forgot the name of it. They just had a senate hearing on it.

It was called a retail residual finance charge where I came from.

 

[lupi]

So, if I'm reading this correct there is no actual way to completely pay off an account then as whenever you pay they could still stick a minute % finance charge onto the amount there before the payment was received?

 

[SoulAssassin]

Originally posted by: lupi
So, if I'm reading this correct there is no actual way to completely pay off an account then as whenever you pay they could still stick a minute % finance charge onto the amount there before the payment was received?

If you're revolving a balance and planning on paying in full you're supposed to know to call for a payoff figure.

 

[kranky]

Generally, if you pay your new balance in full by the due date, that's the end of it. But I bet your card has "two-cycle billing", which would explain what you saw. It would be noticeable if you sometimes pay in full and sometimes carry a balance.

 

[SoulAssassin]

Originally posted by: kranky
Generally, if you pay your new balance in full by the due date, that's the end of it. But I bet your card has "two-cycle billing", which would explain what you saw.

This has nothing to do with two-cycle billing. Short version of the story, that calculates your average daily balance on your two month average. I'm not saying he wouldn't have these charges in a two-cycle method but the fact that he has this charge in no way indicates that's how his finance charges are being calculated.

 

[LS20]

when stuff like this happens i call in and they always waive the charges

 

[lupi]

I've had cards where I carried a balance for awhile and then paid off before. This is the first time I can remember where my check had an amount that equaled the balance due line and then received a statement asking for more money.

Whether I get out of this bogus charge or not, I know good'ole bank of america is now on my do not do business with list.

 

[Pacemaker]

Originally posted by: lupi
I've had cards where I carried a balance for awhile and then paid off before. This is the first time I can remember where my check had an amount that equaled the balance due line and then received a statement asking for more money.

Whether I get out of this bogus charge or not, I know good'ole bank of america is now on my do not do business with list.

Bank of America is not a good bank to begin with (IMO). They do a lot of gray area things that really bug me like clearing accounts by amount (highest to lowest, regardless of what time they were actually taken out) this is to (regardless of what they tell you) maximize fees if you make a mistake (imagine over drafting by 5 bucks and being charged 4x$25 for 4 sodas you bought with your debit card). They also wanted to charge me 4 dollars for a money order, which they have the right to do. However, when Amscot will do it for free and I don't even need to have an account there it smacks of bad service.

 

[dullard]

You didn't give enough details.

Case 1) You have a hidden fee for an unrelated issue that we could never predict since we don't know anything about your situation.

Case 2) You carried a balance and were paying interest. Interest accumulates each day. Between the time the bill was printed and the time they received your payment, more interest had accumulated. Thus, you didn't pay it off in full. Take this crude example as a lesson:

Suppose you owe me $1000 today and I charge $1/day in interest if you owe me any money (regardless of your account amount). If you pay me $1000 today, you'll reach $0 and be there for as long as you never borrow money from me again. But if you pay $1000 in a week, your account is $1000 + $1*7 - $1000 = $7. you didn't pay me off in full. You should have paid me $1007 even though the bill only said $1000. I won't bill you for another month, so when you reach that next bill you'll owe $30 of interest because you didn't pay me in full on the day I wrote the bill. Forgive me for using a slow method of mailing you the bill, to guarantee you won't pay it off in full. :evil:

The solutions: (A) call for the payoff amount and pay by phone that day so no more interest is charged, (B) pay more than you owe and have them credit you back any excess.

Case 3) You have two-cycle billing. This means that if you owed interest 2 bills ago, you are still charged interest on that even though it was already paid off in full last month. 2-cycle billing is a devious and unethical practice. Luckilly it is becoming less common. The solution to this is the same as above: call them and pay more than you owe.

To avoid this in the future, pay it off in full every month no matter what. Then you'll never have to worry and never have to pay more for all these fees/interest.