When A Credit Card Statement Arrives Five Days Before It’s Due

For those people who are credit card account “revolvers” (in that they carry a credit card balance from month to month) waiting to make a payment until the due date is just throwing good money after bad.

Yet a longer “grace period” encourages cardholders to do just that, which is why I hoped The Globe and Mail would print my letter to the editor in which I pointed out the benefit of credit cardholders making payments as early as possible when carrying a balance. 

However, I must admit that my perspective is firmly rooted in the fact that I pay my bills on-line.

As a result, I can see a credit card statement the day it is issued and, if necessary to save accruing interest on a revolving balance, I can pay that account on the day the statement is issued. 

However, I understand why people need and want longer grace periods when they get their bills through the mail and then pay them through the mail.

WHY SOME PEOPLE NEED LONGER GRACE PERIODS

In theory, a fifteen-day period in which to receive a statement may seem to be adequate but, practically speaking, it is just not enough time to get a payment in on time.

Here’s a case in point.

I just received a credit card statement from an account with a company that will go unnamed.  

The closing date for this account was January 15, 2009. The due date is February 9, 2009.

Now, it has a 31-day billing cycle and, according to the misleading definition we see for “grace period” it has a 25-day grace period – the maximum currently available.

Yet, when did I receive my statement? When was it actually delivered to my door?

On February 5, 2009.

Had I waited to receive the statement through the mail to pay it, what are the chances that my payment would have arrived in time?

With a due date of February 9th, my quess is “no chance at all.”

WHEN PAYMENTS ARE APPLIED

Credit card companies do not look at postmarks before assessing late fees. They look at when your payment made it into your account, which involves internal processing time as well as mail time.

So I have no doubt that my payment would have arrived late and I would have gotten a late fee in the amount of around $39.

This is why I pay my credit card bills on-line. I schedule the payments, mark my calendar so I know I’ve paid them, and then forget about it.

As a result, I am not dependent upon the mail and I never get hit with late payment fees.

I realize that not everyone is comfortable using a computer or learning how to pay bills on-line.

For those people, yes, they do need longer billing cycles and “grace periods” just to get their payments in on time and, for revolvers, this will mean they will pay even more accrued interest. 

Although, from what I see, a longer “grace period” will not necessarily insure that a person does not inadvertently incur a late fee.

Credit card companies process tens of millions of statements and they go out in batches.

Just because your statement date is January 15th, don’t think for a minute that your statement was mailed on the 15th.

Yet can you tell? Look for a postmark on the envelope. It’s likely there isn’t one. It’s processed in bulk.

Bottom line, the smartest thing any of us can do is to declare independence from arbitrary “grace periods” by paying  on-line each month.