Late payment fee question

Gravelrash_2

Hi

I have recently been charged for a late payment fee, and it has raised for me a question about how my provider works out late payment fees full stop.

Basically, the payment due date for each month varies slightly, but is generally around the 28th of each month.

I do make sure I pay more than the minimum every month. However, in June, I made that payment on the 3rd June. I had also made a payment on 10th May, to make sure I had made my payment on time in May.

However, my bank has told me that the Payment on 3rd June was made too soon, because I paid before the June statement had actually been issued. Yet it would also have been too late for May (if I hadn't already paid on the 10th), as the May payment was due by the 28th May

So basically, any payment made between the 28th of any month, and the 4th of the next month, does not count towards any minimum payment.

Surely this is wrong, and should be raised with the Financial Ombudsman?

I have a feeling that if I complain, then the bank will probably refund me the £12. However, even if they do, I still feel this practice should be stopped, so how would I go about escalating the issue if the bank do refund me the money? From what I can see, the FOS are only interested in unresolved complaints, not general policy issues.

Herbalus

Every single credit card works in exactly the same way. You need to make your payment after the statement is produced and before the due date on that statement.

If you pay on the 3rd and your statement is produced on the 4th, how can you say that you have met the payment requirements on your statement?

If you borrow £20 from Bob, give him back £10 on Sunday, and then he tells you on Monday that he wants a minimum of £5 by Friday, you can't say the £10 counts because he said what he wanted after he knew what you had already given him.

msallen

I'm afraid the bank are completely right here. For a payment to count against a particular month's minimum, then it has to be made between the date the statement was raised and the due date. You apparently paid before the statement was raised. As is said on here time after time - the best way to avoid such issues is to set up a direct debit for the minimum payment.

The Financial Ombudsman would have no interest whatsoever in this.

RuFFCuT_RetRo

The bank are completely right, I would just write off the £12 as a very cheap learning exercise

It's the way it has been since forever, until you get billed you're still working on your previous bill - for example if I got a credit card bill in May with a minimum payment of £10 which was taken out via Direct Debit, I could then make another payment and it will take me above the minimum payment for the Month of May - It wouldn't take it of my bill in June....

Cycrow

i had the same problem. I use to pay off the months payment when i go paid, which happened to fall between the due date and statement date.

i managed to get the late payment fee waived as a goodwill, and now just make sure i wait until i get the statement before paying

Cornucopia

I guess it'll come down to the exact wording in the Card Ts &Cs.

Whilst I agree with others that the CC month starts at the statement date, in the real world, people make payments whenever they like/whenever they can, and it would be sensible if the CC companies recognised this.

StuC75

Spot on explanation by the bank, and is how all credit cards.

This is how banks have sought to reduce the 'upto XX days interest free on purchases' in the month as they give 'minimal time' between statement and due date...

If the earlier dates suit you for making payments following paydays, then speak with the provider to see if statement date could be moved so the payment is outside of that period.

Gravelrash_2

OK, thanks for all the responses.

In some ways I'm not too bothered by the £12 itself.

However, I can see by the responses that I am not the first person to get "caught out" by this policy, and it strikes me that that is why it exists - simply to catch people out.

In my view, any payment made after the "due date" for one month should count towards the payment for the next month. The idea that there is a time-window in which a payment doesn't count towards any month at all seems ridiculous.

Just because "they all do that" it doesn't mean they should.

And thanks for the advice, but Direct Debits work really badly for me. I am self employed and have unpredictable cashflow. Much better for me to pay everything due as soon as I get a payment from one of my customers.

Hominu

Cornucopia wrote: »

in the real world, people make payments whenever they like/whenever they can, and it would be sensible if the CC companies recognised this.

The only way that would work is if the payment period was from the beginning of the month until the end of the month, and considering each month has a different number of days, the payment period would be different each month.

Fact is you still need to check how much you have spent upto the end of the month and then clear the balance, so you might as well just pay a savings account adhoc and then pay the balance once you receive the statement saying how much they are expecting.

It's not exactly rocket science: Receive bill, pay within 20 days.

Do people expect to pay their energy bills whenever they like/whenever they can? No, they either pay a sum after receiving a bill, or pay a (possibly fixed) amount by direct debit. CC's are no different.

Herbalus

Gravelrash wrote: »

In my view, any payment made after the "due date" for one month should count towards the payment for the next month. The idea that there is a time-window in which a payment doesn't count towards any month at all seems ridiculous.

Your payments are still payments, and reduce the bill accordingly. What is missing here is that you still have to pay your (reduced) bill when they give it to you.

If you spend £200, the company wants £200, so if you give them £150 before the bill then they will send you a bill for £50. Not paying £50, or part of it, means that you haven't paid any of the bill.

fozmcfc

Agree with the others, it is simple, you get a bill, you pay the minimum at least by the payment date, job done. You then wait for next bill and pay again at least the minimum by payment due date.

There needs to be a gap between payment due date and next statement issue date, for the payment to be registered as received/or not received and the statement produced to take that into effect.

Just because a few people may post up similar to the OP from time to time, doesn't mean that the vast majority of us who use credit cards, don't know and are quite happy with how it works.