Effect on credit refunds to Statement balances?

don9999

With previous credit cards I've held eg. Alliance & Leicester, if I received a credit refund then the statement balance that I would have to pay (to prevent interest charges) would have been reduced accordingly. For example, if my statement was £2,000 and I received a credit refund of £100 before the prescribed payment date, then I would only have to pay £1,900 to prevent interest being charged.

However, my current credit card provider, Citibank, claim they treat it differently.

My usualy credit card bill is around £2,000 per month.
My latest statement is for approx. £5,500 - which included Christmas purchases and a couple of large purchases that were made on approval. I quickly returned those large purchases (total approx. £2,500) and I can see on-line that the credits were posted in January.
My statement balance is due for payment on 6th February.

With other credit card companies, I would have expected only to have to pay £3,000 by 6th February.

Citibank are telling me that I have to pay the full £5,500 and take my card into credit!

Is this common? Is this 'allowed'? I can't find anything in the T&C that considers this situation. The closest that I can find is:

"If a supplier is liable to make a refund in respect of a Transaction, We will credit your Account with the amount specified in a properly issued refund voucher that We receive from the supplier and is set against the particular Transaction."

Now I can interpret this as saying that if the refund is 'set against the particular Transaction' (which took place in late December) then it would reduce the statement balance accordingly. That I need only re-pay the lower amount.

Do you agree?
But what can I do about it?

Cheers,
Don

dc

AFAIK refunds are treated as -ve purchases on the day they are received by CC, and not payments.

Unfair I know but they consider the reason for the refund to be between yourself and the person/s you purchased the goods or sevices from. The money having been paid by the CC to the supplier, when the transaction was confirmed.

dc

grumbler

I think this is not common and is wrong. The only problem I can see could be if you pay full balance by DD - some CC companies don't take partial payments into account when taking payment by DD.

Milarky

If the refund gets to the account before a statement is produced that is plain enough - the amount due should reduce.

If the refund gets there after the statement why should the card co. treat that as a payment of the 'existing' debt? For instance, the item could also have been bought after the statement and refunded before the due date [in the 'gap']. You wouldn't expect the co. to allocate the credit refund to the pre-existing debt and carry the purchase for settlement into a subsequent period would you?

From that vantage Citibank would appear to be within their rights to allow the card to go into a credit (assuming they would refund this to your bank)

King_Of_Fools

The problem seems to be that any refund made after the statement date but before the payment date will not count against the amount owed on the statement and if you do not pay the full amount by the payment date you would be liable to interest.

Take a simple example, if your statement total was £1000, you had a refund made for £100 after the statement date but before the payment date and you also spent £200 between these dates then if you would have to pay the full £1000 to not be liable to interest (the £100 refund would carry forward to the next bill and count against the £200). If you only paid £900 you would be liable to interest on £100 because you account was still in debt.

However, because your refund is so large I would assume that you only need to pay enough off to get your acount out of debt - you will still be liable to interest but will not pay any as your acount would be in credit. For example, if your statement was for £5,500 and you have subsequently had a refund of £2,500 - if you assume you are going to spend £2000 this month then you would only need to pay off £5,000 to cover everything. You would be liable to interest on £2,500 but as long as your account does not go into debt you would not have to pay any.