Creditnet Weekly Tip
Beware of Tricky Credit Card Payment Terms
Some consumers find it more convenient to pay off their credit card bills in several payments throughout the month. Why would they want to do that? Well, there are several reasons.
Perhaps they have a low credit limit and prefer to keep their credit utilization at a reasonable level, or perhaps they carry a balance on their credit cards and simply want to save as much as possible on interest charges? Whatever the motivation, if you're one of them, you'll want to pay close attention to how credit issuers change payment rules as they seek for new ways to replace lost revenue due to the CARD Act of 2009.
For example, make sure you know exactly when your credit card statement closes and how your credit issuer will apply payments to your account. Payments made before a statement officially closes may sometimes only be applied to the previous month's balance, which can get confusing for those who make multiple payments each month. You might think you made payments on both statements, only to find out that you were slapped with a big late fee because both payments were credited to the previous month's balance, leaving the current statement unpaid and overdue.
Take a closer look at your credit cards' terms online for more detailed information about how payments will be applied, and don't forget to open up that credit card mail and read it too! Yes, it can be a painful to read all that fine print, but it's certainly better than finding out about important changes to your terms and conditions by getting slapped with more fees and higher interest charges.
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