I made my annual sock shopping trip to Macy's a few weeks ago. I paid for my purchase with my Macy's Visa card, always worth a little discount. When I received e-mail notification of the bill a week later, I went online and paid it immediately.
Therefore, I was a little surprised to get a paper statement a couple of weeks later, but maybe their system is a little slow. Or perhaps they always send it. What astonished me was to see that the statement total was $2 higher than the bill.
You can see that the bill was for $48.24 but that the statement shows an amount due of $50.24.
I called to see how an additional $2 charge crept in. They said that was for interest if I chose not to pay the full amount due. I checked the credit agreement and it says:
B. There will be a Minimum INTEREST CHARGE of $2.00 in any billing period in which the INTEREST CHARGE resulting from application of the Daily Periodic Rate would be less than $2.00.
I protested that I had already paid the bill but they said it was, "Just our policy." I asked what would have happened if I had paid the $50.24 in full with the statement. They said that the $2 would have been credited to my account. I'm not sure I believe them.
The agreement does not say that they will charge you ahead of time, assuming that they will be entitled to collect interest on the next billing cycle.
A further review of their credit agreement showed this feature:
If you make a Purchase during a billing period with an unpaid Previous Balance, we will begin charging interest on the Purchase from the date it is added to the balance and continue to accrue interest until payment in full is credited to your account.
As I read this, if I did not pay the bill in full and bought something else, that they would start charging me interest, currently 24.5 percent, on the date of purchase, not at the beginning of the next billing cycle.
Obviously, issuers of credit cards are trying everything they can to squeeze more money out of you. But this doesn't seem like much of a reward for my loyalty to the Macy's brand. I wonder how much they will charge me to cancel the card.
Randy Johnson – Author of How to Save Thousands of Dollars on your Home Mortgage and Savvy Borrower
articles, Randy is a mortgage broker who has financed over $1 billion
in properties. He writes about home buying and real estate finance
topics for CreditBloggers.com.
Randy Johnson Randy is a Credit.com contributor and seasoned mortgage expert. He writes about home buying, mortgage laws and real estate finance issues. He has financed over $1 billion in properties, is the author of How to Save Thousands of Dollars on your Home Mortgage and he is a feature columnist for Savvy Borrower.
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I have a (slightly complicated) system where I use my ING account to send a payment every week to my credit card. This way I don’t carry a balance and do not have to worry about if they change the grace period to 20 days one month and 25 days the next. I also do not worry about them changing the payment due date because they will always get a payment before the due date. I don’t carry a balance so I don’t pay interest.
This is very interesting the way they word it and the fact that the person could not remove the charge.