Warning! Paying off your credit card DOESN'T mean it's clear

MSE_Martin · 8 June 2010 at 5:18PM

Warning! Paying off your credit card DOESN'T mean it's clear
Be vigilant! Avoid £100s in bills & credit problems due to forgotten charges & missed payments

This e-mail's typical of the many we've received, "we paid the card off, but months later they send demands for two unpaid cash withdrawals from 10 months before."

Never assume paying off your card means it's clear, you need to keep checking, as if there are charges to come and you don't repay you could be hit by fines and credit problems.

Reason 1. Cash withdrawal interest.

Even if you repay a card IN FULL you're still charged interest on ATM withdrawals, which often appear on the next statement.

Reason 2. Old payments.

Sadly companies don't have to request money from your credit cards straight away, it can be months after the transaction, so any outstanding payments may be very late.

What to do

Check every statement for at least six months. Even if you think you've cancelled the card, don't don't assume that's the end of it they often leave accounts open for months in case of late payments. So call again 6 months later to check the account is finally closed.

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jonesMUFCforever · 8 June 2010 at 8:40PM

Must admit I have never heard of an ATM fee and the withdrawal being on different statements.
Surely they would be applied on the same transaction day?
The rest is very good advice.

Also of course make sure you have no continuous authority payments remaining on any account you want to close.

Imani · 8 June 2010 at 9:21PM

Good thread
Where I work people tend to assume they paid their bill in full but do not take into consideration that interest in accrued daily and often added to the next bill. always worth getting a settlement figure and making a few check after the bill is paid

Devonian_Rodders · 9 June 2010 at 9:14AM

The solution to receiving unexpected demands from Credit Card Companies is keep a list of what you spend, where, and on what.
This has a useful purpose insofar you can always ensure the statement is correct.
I have used this method by adapting a spreadsheet, and it works.

I never believe in giving cash to Finance Houses.

unidentified · 9 June 2010 at 9:32AM

The easiest method (if it's available to you) would be once the card is paid off, close it immediately and ask them to confirm it's closed. Then also check your credit report to make sure it's closed (settled).

This way, if at a later date there are charges still owing, since you are no longer a formal customer they would have to send you a letter stating that there was an amount owing at least making you fully aware of it.

Prevention is better than cure in the end.

Just my two cents.

ERICS_MUM · 9 June 2010 at 9:51AM

Devonian_Rodders wrote: »

The solution to receiving unexpected demands from Credit Card Companies is keep a list of what you spend, where, and on what.
This has a useful purpose insofar you can always ensure the statement is correct.
I have used this method by adapting a spreadsheet, and it works.

I never believe in giving cash to Finance Houses.

This is the first time I have confessed "in public" that I too keep spreadsheets for my CC's and bank accounts so I always have a list of amounts spent and any related charges that have not yet appeared on the account.

ntvrman · 9 June 2010 at 12:47PM

I've received a letter from the RAC saying that a payment - i made back in october 09 had failed. upon my investigation - found that i paid with a credit card that i've now cleared and closed. what i wanted to know, is that my fault for not checking whether the payment had been made, or is it down to the RAC in other words do i still need to pay them when i in good faith thought that as i'd cleared the debt on the card and closed the account that would be the end of it.

Neal.

RussellR · 9 June 2010 at 1:27PM

ntvrman wrote: »

I've received a letter from the RAC saying that a payment - i made back in october 09 had failed. upon my investigation - found that i paid with a credit card that i've now cleared and closed. what i wanted to know, is that my fault for not checking whether the payment had been made, or is it down to the RAC in other words do i still need to pay them when i in good faith thought that as i'd cleared the debt on the card and closed the account that would be the end of it.

Neal.

An easy mistake to make, as it would be reasonable to think that the transaction would have gone through in October/November - but at the end of the day you haven't paid so are morally and legally bound to use a current payment method now.

On the plus side you have had use of that money for over six months.

Your story reinforces the need to keep your own record of what you spend, rather than expect that all transactions are processed quickly.

Russell

unidentified · 9 June 2010 at 1:53PM

RussellR wrote: »

An easy mistake to make, as it would be reasonable to think that the transaction would have gone through in October/November - but at the end of the day you haven't paid so are morally and legally bound to use a current payment method now.

On the plus side you have had use of that money for over six months.

Your story reinforces the need to keep your own record of what you spend, rather than expect that all transactions are processed quickly.

Russell

If you requested it closed and the card was settled, yes you would still be liable to pay for the transaction which would yours, but not for any late repayment fee.

And if they try to slap a late fee or missed payment on you, I would show them the settled status on whatever date it was and fight that out.

The_Archivist · 9 June 2010 at 2:20PM

I have had so much trouble with being able to monitor exactly how much I owe the credit card for EVERY credit card I've ever had. And I include all the mainstream lenders' credit cards. The online and/or paper statements are sadly out of synch with what I actually have owed on the card. I got around this by keeping an Excel spreadsheet of exactly what I spent which included date, item, cost and total balance. I was able to tell exactly how much I had spent and what my outstanding balance was. I then paid off this amount every month (after calculating the due date and subtracting the 3 days it takes for the credit card account to be paid - another little scheme they use to get money from you). I trusted my spreadsheet over any bank/building soc/lender's credit card statement. Even the local branch cashiers were out of touch as I guess that they had the same inaccurate information as I was getting and the lenders' central office kept the true figures to themselves - to earn money out of me.

Conclusion - keep track of your credit card spending yourself and always pay it off every month. Otherwise they'll earn interest out of you.

CannyJock · 9 June 2010 at 5:01PM

Imani wrote: »

always worth getting a settlement figure and making a few check after the bill is paid

Still to speak to a CS person who could give this over the phone

If in doubt, pay the last statement plus the interest on the last statement - should create a small credit balance.

Warning! Paying off your credit card DOESN'T mean it's clear

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