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Credit Card Late Fees...how do they work?
Old 02-06-2009, 08:21 PM   #1
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Credit Card Late Fees...how do they work?

Until now I've lived a simple sheltered life.....get credit card bill, pay in full before due date. Now, I am about to go on extended trip and want to make sure I don't get late fees. I thought if you pay a minimum due amount by the due date, you get interest charges but no late fee.

Today I learned from CSR that if I pay current balance in full today and reduce balance to zero (an amount I am sure that is greater than any minimum due amount), I could still be hit with a late penalty. The problem is that if after I reduce the balance to zero, I make more charges before the statement period ends on Feb 9, and then pay nothing between Feb 10 and the due date, I will be considered to be late because only payments after statement period count..... and the earlier one to reduce current balance to zero payment does not count against the minimum payment because it is too early. I was very surprised to learn this....and want to avoid because late penalty can be as much as $39.

The only solution offered so far was to suscribe to autopaying the full balance.......I had previously not wanted to do that but seems to be the only option right now if I leave on the trip before the statement period ends.

Is my understanding of this situation correct? Any other solutions? Don't want to pay online during the trip.
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Old 02-06-2009, 08:22 PM   #2
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Use a debit card?
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Old 02-06-2009, 08:45 PM   #3
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Quote:
Originally Posted by kaneohe View Post
The problem is that if after I reduce the balance to zero, I make more charges before the statement period ends on Feb 9, and then pay nothing between Feb 10 and the due date, I will be considered to be late because only payments after statement period count..... and the earlier one to reduce current balance to zero payment does not count against the minimum payment because it is too early. I was very surprised to learn this....and want to avoid because late penalty can be as much as $39.

The only solution offered so far was to suscribe to autopaying the full balance.......I had previously not wanted to do that but seems to be the only option right now if I leave on the trip before the statement period ends.

Is my understanding of this situation correct? Any other solutions? Don't want to pay online during the trip.
I have an automatic monthly payment from my on-line bank to my credit card set for 5 days after the statement ends. The amount is far higher than any likely minimum payment. I always pay in full but this is just an insurance in case something happens and I fail to pay on time. In your case the payment would be scheduled for the 14th of every month.
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Old 02-06-2009, 09:04 PM   #4
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Alan,

Why wouldn't you log into your credit card company's web site from wherever you are, check the balance and make the payment as necessary?

Besides, with an excellent payment record, you should be able to call the credit card people and ask for the late fee to be waived. I did that once with my PenFed VISA and they were very nice about it. Of course things may have tightened up since then.

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Old 02-06-2009, 09:14 PM   #5
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Alan,

Why wouldn't you log into your credit card company's web site from wherever you are, check the balance and make the payment as necessary?

Besides, with an excellent payment record, you should be able to call the credit card people and ask for the late fee to be waived. I did that once with my PenFed VISA and they were very nice about it. Of course things may have tightened up since then.

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I always do just that and have never missed, but sh*t happens. For example, Hurricane Gustav had us without power for 2 weeks - impossible to log in and pay anything - I know I could phone in and pay but like an idiot I only had a cell phone which expired after 3 days. If those 2 weeks happened during the period I should be paying my credit card in full, then the automated payment would have saved me from late payment charges.
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Old 02-06-2009, 09:25 PM   #6
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If you don't have a history of late fees - call them up and tell - don't ask - them to remove it. It worked for me - then again the last time it happened to me was about 25 years ago.
Save yourself some time and money by having the total amount due automatically deducted from your checking account.
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Old 02-06-2009, 10:38 PM   #7
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Other ideas:

1. Give a trusted friend a check to your credit card company enclosed in a stamped and pre-addressed envelope and ask them to drop it in the mail on Feb 9th.

2. Schedule a "push" payment from your bank's online bill pay to your credit card company. Most online bill pays allow you to specify in advance to send $X to Y person on Z date.

3. Pay by phone while on your trip -- call the credit card company ahead of time and ask what number to call from overseas. I think most of the big firms have international numbers that you can call collect in these situations. If you have your checking account number and bank routing number, they should be able to process an e-check (although there may be a fee for this; I've never used the service.)

Don't know if any of these ideas work for ya.

I hope you enjoy the trip!

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Old 02-06-2009, 11:57 PM   #8
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Are you sure you can't run a positive balance in the account? IOW, *overpay*, don't just bring it to zero. For example, you think you might run up $2,000 of charges before you get back. Send a check in for $3,000 before you leave.

I'm pretty sure they will just credit the excess to your account. So you would have $1,000 positive when you get back and no bill due. That basically turns it into a debit card, where you would need that money in the bank to cover charges - here the money is already on your card to cover charges.

I recall a story from the old days, might not be true, but someone was overpaying on their credit card and *collecting* the double-digit interest rate in their account.

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Old 02-07-2009, 05:35 AM   #9
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Never tried it but is appears you can "overpay" your PENFED card at any time (I doubt they will pay your interest on the "overpayment" but, there is an easy way to find out). I have mine set up for auto pay from a Share Account and just leave a balance in it to more than cover any CC bill. I used to over pay Electric Bills years ago - just sent them a large check and they whittled away at it every month (I know free loan).
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Old 02-07-2009, 08:09 AM   #10
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Thanks all for the suggestions. I think I'm going to try autopaying the full balance......the amount is relatively small since the card is used only for the 5% rewards at markets/drugstores. That will also save a lot of time paying it on the old/very slow dialup Win95 machine.

This was a very educational experience for me.....the system seems to be set up, whether by purposeful design or accident, to capture late fees. I thought of stopping use of the card before statement closing period, then paying manually. Possible problem...if I pay too early and charge straggles in later because merchant was slow in submitting, I would not know about it and there would be balance at statement closing w/ late fee.

I also thought of paying a few days before statement closing period, then checking again a few days later. Possible problem: this particular card does not allow you to pay within 3 days of previous payment so this might not be allowed if first payment was 1 or 2 days before the close.
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Old 02-07-2009, 08:37 AM   #11
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Originally Posted by kaneohe View Post
Possible problem: this particular card does not allow you to pay within 3 days of previous payment so this might not be allowed if first payment was 1 or 2 days before the close.
Are you sure about that?

I know that with many electronic payments, you can't *alter* a payment within three days of the payment being made - it is marked "in process" and locked. Makes sense.

But I don't think that stops you from making an additional payment though. I'm pretty sure they will take your money.

You seem to be over-complicating this. Why not just *over-pay*? Doesn't that solve every problem for you?

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Old 02-07-2009, 08:53 AM   #12
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Thanks for your comments, ERD50. I'm actually not sure about anything since it's all from talk w/ CSRs (sometimes a dangerous thing admittedly). They've seemed to have the same story tho so I am inclined to believe. Re: them refusing money......could be true......usually I get offered several payment options: pay min , pay balance, pay amount of my choosing. On one particular card, balance was less than statement balance because a credit had come in after period closed. I tried to pay the higher number (statement balance) so I wouldn't get confused. System wouldn't allow me to pay number higher than the balance.
Surprised me too. I guess not all cards would be the same but at least one example where extra money was turned down. I don't know their motivation .
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Old 02-07-2009, 09:00 AM   #13
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We're retired and often travel for extended periods. After the first year and a couple of hassles, I have now set up all recurring bills (credit cards, cable, electric, telephone, etc.), to automatically be paid from checking on their due dates. We just have to be sure to keep the balance high enough to cover it all, while we're gone.
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Old 02-07-2009, 09:05 AM   #14
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Thanks for your comments, ERD50. I'm actually not sure about anything since it's all from talk w/ CSRs (sometimes a dangerous thing admittedly). They've seemed to have the same story tho so I am inclined to believe. Re: them refusing money......could be true......usually I get offered several payment options: pay min , pay balance, pay amount of my choosing. On one particular card, balance was less than statement balance because a credit had come in after period closed. I tried to pay the higher number (statement balance) so I wouldn't get confused. System wouldn't allow me to pay number higher than the balance.
Surprised me too. I guess not all cards would be the same but at least one example where extra money was turned down. I don't know their motivation .
My Amex credit card does not allow an overpay from their site BUT if you pay from your on-line bank (ie push the money to them) they don't refuse - just credit it to your account and if it creates a credit then you have negative balance.

We're going to England for 3 weeks end of April and this time we are not taking a laptop as we are going everywhere by foot and train/bus. I don't plan on checking and paying balances from public computers so will be relying on pushing payments to ensure I end up with a negative balance. We'll also be using a debit card rather than the credit card (we have money in a UK bank account we'll be using).
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Old 02-07-2009, 09:06 AM   #15
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In the near term (too late now I know), get a new card.

As an experiment, I will overpay my cards by $10.xx dollars this month, just rounding up. I'm pretty confident that they will take the extra and credit it against future payments.

I know some do - here's an example: My son's credit card is through our credit union. He can transfer money in real time, since it is all linked to the same account. At my suggestion, he set it up to auto-pay the minimum from his savings account to avoid any possibility of a late fee. Then, he saw how much was coming due (before the minimum was paid), and paid the full amount with a transfer from the checking account. So he had a small positive balance, which then was whittled down by future charges.

So it can be done. But I don't know if it is the usual way it is done.

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Old 02-07-2009, 09:34 AM   #16
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I've done it two ways. First way is to just over pay the last bill so that I have a credit. Second way is to have bill auto paid from my checking account every month.

I've noticed that some cards make you hunt around their web site to figure out how to do the auto pay, others are straight forward. Those late fees add a lot of profit for banks.
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Old 02-07-2009, 09:41 AM   #17
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My Amex credit card does not allow an overpay from their site BUT if you pay from your on-line bank (ie push the money to them) they don't refuse - just credit it to your account and if it creates a credit then you have negative balance.
I think you hit the nail on the head.

The pay method offered by the card company may have these limitations, but I'm pretty sure that if you get money to them, they will accept it.

I tend to avoid the company specific pay methods. Each one can have different rules and methods to get familiar with. I mostly have either charge direct to CC, or use auto-pay set up through my bank - one interface to work with.

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Old 02-07-2009, 09:52 AM   #18
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I tend to avoid the company specific pay methods. Each one can have different rules and methods to get familiar with. I mostly have either charge direct to CC, or use auto-pay set up through my bank - one interface to work with.
Exactly. And once you have a company set up to pay from your bank it really is very easy to do.

PenFed is the primary card I use and if you pay from their site they do not allow you to set a date for payment so I prefer to schedule a payment from my bank to eek out a few extra days of interest.
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