A lesson in using credit cards

A few months ago, I’m embarrassed to admit, I completely forgot to pay my credit card bill. I know it’s inexcusable and I felt really bad. I use credit cards strictly for convenience and to earn points, never to borrow money since we all know how outrageous the interest charges are. As soon as I realized my payment was late, I paid off the full amount on the overdue statement and knew I’d be smacked with an interest charge on the next bill.

The next bill came, I was choked by how much they charged me for being one lousy week late, but I knew it was my fault so I sucked it up. And then I made sure to pay my next statement ON TIME.

Now, imagine my surprise when I got my most recent bill, and there was still an interest charge on it! I figured somewhere in the small print there must be some reason why they could be doing this, and the part of me who was embarrassed at having made the mistake of forgetting to pay the statement just wanted to pay the stupid fee and forget about it. But the ‘hey wait a minute’ side of me wanted to know what was going on.

So I decided to call the credit card people and find out. I spent quite a bit of time on the phone with the guy. He was deceptively nice, and kept agreeing with everything I said, like ‘I paid this then so what’s the problem? Why did I get charged more interest?’. And he kept saying ‘You’re right you did.’ I didn’t understand at all, and just felt really stupid and dumb because I just didn’t understand why I got charged interest. I was so close to just getting off the phone with the guy and just sitting here and mulling it over, but I knew if I did i would just end up paying the charge and still not really understand. So I just point blank told him I felt really dumb and sorry about this but I just didn’t understand. So he told me he didn’t mind sitting here explaining it to me again and again. So we went through it again and finally I was able to understand the following important lesson:

All this time I have been enjoying using interest free money and paying for it at a later date. This is something the credit card company grants me as long as I pay all my statements off in full, every time.

Now here is where my misconception came in. I was under the impression that if I paid off my statement in full one week late, I would be charged interest on the over due amount for the one week it was over due.

But that is not how it works. Apparently, as soon as I miss a payment, my borrowing money interest free gig is taken away and I start being charged interest on every purchase I make because my account is no longer ‘in good standing’. So the purchases I made after I paid that bill one week late, which would be interest free if my account was in good standing, were no longer interest free until I got my account back in good standing which takes two months of paying it on time.

I hope that made sense. The bottom line is to avoid more interest charges what I should have done as soon as I realized my payment was late was call up my credit card company and find out the total balance owing on my card (not just the balance on my statement because it’s not the most current) and paid that full amount. Then I wouldn’t have had this other surprise interest charge.

After the guy explained it to me, he asked if there was anything else I wanted to ask about. So I asked if I could have this second interest charge waived. He was a little reluctant because I was after all in the wrong, but eventually he agreed. I was nervous about asking (it’s hard!), and so relieved that he reluctantly agreed that then I was like ‘ok thanks bye!’. But in retrospect, I would have liked to confirm it verbally again like “Thank you so much for doing this for me, I really appreciate it. So I really don’t have to worry about paying this interest charge, it’s taken care of?’ And he’s say yes and I would thank him again. As it stands the conversation ended so quickly that now I worry that maybe the charge will not be taken care of.


3 Responses to “A lesson in using credit cards”

  1. 1 Frugal Canadian Living June 14, 2008 at 2:11 pm

    The second charge should be taken care of. I had this happen to me before on a VISA from Royal Bank. I had to speak to the manager because the CSR refused to reverse the charge. I explained that I had always paid my bill on time and if they could not reverse this charge I would have no choice but to switch to a different bank.

  2. 2 Wooly Woman June 18, 2008 at 6:30 am

    I guess I didn’t realize this either! How confusing, and somewhat seemingly devious of them. I am sure it is in the fine print though 🙂

  3. 3 Matthew November 19, 2008 at 6:48 pm

    I remember overhearing this rule at a bank a while ago, and it really opened my eyes.

    That having been said, even with the occasional mishap, using a credit card smartly and accumulating points is very rewarding. I charge about $2000/month to my PC MasterCard which gives me the equivalent in 1% back in free groceries. That’s $240 in free groceries a year.

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