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.  [Read more →]

ARTICLE PUBLISHED BY THE GLOBE AND MAIL

On January 27, 2009, The Globe and Mail  published an in-depth article entitled “A budget to drive spending” in which it detailed what the federal government in Ottawa had put in its budget to help Canadians weather these difficult economic times. Here’s a quote from the article:

“The grace period is the time between the statement date and the date payment is due. Banks and other credit-card isuers determine their own grace periods, which generally vary from 15 to 26 days. The longer the grace period, the less interest a customer could have to pay.”

After reading and re-reading the section on Ottawa’s intentions to draft legislation affecting credit card companies and, specifically that last sentence, I was concerned that readers would assume that a longer grace period will automatically save them money in all instances.

[Read more →]

Bad News: RIP 30-Day Grace Period

That’s a headline you should see, but won’t, yet it’s bad news for every credit card holder who pays off his or her balance each month. 

What’s going on? Credit card companies are phasing out the 30-day grace period. It’s happening at the company where I work – one of the biggest “plastic” companies around – yet it’s not limited to one credit card company. This trend is sweeping through the entire credit card industry.

What is the result? A cardholder who pays off his credit card balance each month will no longer have 30 days from his statement date to do it. He will no longer have 30 days to pay off any of his credit card accounts before interest begins to add up. 

Instead, he will have fewer days – 25 days – to come up with his credit card payment. 

Since the concept of the “grace period” is confusing to many people (including some credit card company agents) let me explain what it is.

[Read more →]