Payment due date with Capital One

Pheebs67

Bedford_Jezzard wrote: »

I've just realised how Capital One conjure up the money to pay cashback on their World Mastercard. The gap between statement date and "Payment Due" date is only 15 days and, as they say direct debits may be taken up to 5 days before the due date, this gives a credit period of only 10 days, compared to 25 - 28 days on all previous cards I've had.

This has nothing to do with how the cashback is 'paid for', and if you wish, you can make your payment (as I do) on the due date if you're paying via Faster Payments.

If anything, you paying off the balance 'earlier' is actually more of a negative thing for them because as a business, they have less of a balance on their books to offset against other asset lendings (card, loans and savings).

On top of this, your 'credit period' (Interest free period) is actually up to 46 days (depending on the number of days in the month). If your Bill day is the 1st of the month and you purchase something on the morning of the 2nd of a 31 day month (Eg. Jan), this will be included on the statement produced on the 1st of the following month (Eg, Feb) and you won't have to pay for this item until COB on the 16th.

Bedford_Jezzard wrote: »

It seems to me that, if I had a card with 28 day credit period and put the amount of my credit card bill in a savings account for two weeks each month, I'd end up earning more in interest than I'd get with Capital One cashback. Or have I got this wrong?

Yes - Wrong I'm afraid.

What you're suggesting here is kind of a very short term cyclical Stoozing effect I guess . . . which, in your scenario, you'd be gaining about 13 additional days of 'interest' in a savings account; aside from needing to be easy access, would need a significant interest rate to beat your cashback amount. (I got £400 CB this year which on my average monthly cyclical balance & being in the savings account for 2 weeks of each month, would need about 26% APR after tax to achieve)

Bedford_Jezzard wrote: »

In any case, it would be a good idea to publish the gap between statement date and payment date when mentioning credit cards on this site.

"This site" - if you mean Capital One's 'site, then they do.

4th Paragraph of section 2 of the SECCI.

capitalone.co.uk wrote:

Repayments.
All monthly payments are due by the date stated in your monthly statement, a date usually 15 days after the statement date. Your monthly payment will be the full outstanding balance if it is less than £5, but otherwise the greater of:
(a) An amount equal to the total of (i) 1% of the outstanding balance on your account; (ii) interest applied to your account in that month; (iii) all default Sums incurred in that month; and (iv) one twelfth of your Annual Fee, or
(b) £5

chexum

nomoneytoday wrote: »

I doubt the merchant knows the brand of card used. They'll just see a Visa / Mastercard payment and be charged their standard rate by their bank

Source (for the US): google "mastercard interchange rates and criteria"

Classes of consumer cards according to Mastercard, and the respective "Supermarket - Tier 1" commission for the US:

- Core Value/Enhanced Value - 1.27%
- World - 1.37%
- World Elite/World High Value - 1.37%
- Debit - 0.70% + $0.15 (max $0.35)
- PIN Debit POS - 0% + $0.18

There are less subtle changes for other types of merchants.

"I doubt" your dry cleaner would know the difference at first, but when their rates are going up slightly when the only change they see is more people with funny cards, they won't like those funny cards.