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I had a credit card with a high balance that I had been paying on for a long time but making little progress towards the high balance. Then one day I came upon some money due to a death in the family and sent a check in for the full balance as stated on the statement.
After I sent my payment in, I felt a great sense of inner peace thinking how great it was to have a zero balance on the credit card. MY INNER PEACE DID NOT LAST LONG! Trouble was I did not understand how interest on credit cards were calculated. The full amount I paid on the card- when I assumed I paid off the account in full- was the principal and interest UP TO THE STATEMENT CLOSING DATE. What I didn't understand at the time was they would continue to charge interest on the credit card from the closing date to the day of the credit card statement to the account was paid off.
So anyway, the next month the bill for that credit card came in the mail and I ignored it. I thought, why bother to open that envelop, it would just show I had paid off that credit card and I had not used it since. So I did nothing. Another month passed and another bill came in the mail. I was shocked, and thought "why are they still sending me bills for a credit card I already paid off?" So I opened it up and saw all kinds of fees and a new penalty 30% interest rate. There was a bill for the amount of interest from the closing date of a previous bill and the date I thought I paid off the whole balance, and then interest on that balance for the next months and fees for not sending in a previous bill. I checked my credit reports and saw I was listed as 30 days late for that credit card. The one I was so proud I thought was paid off.
So I quickly paid the bill. But the next month I got another bill for the interest I had not paid from the gap between the statement date and the payment. So the next time I over paid to make up for any difference. What a nightmare.
A lesson learned about the credit card interest on an existing balance!
CC companies will bleed you to death in interest, fees, penalties, etc.
But you can avoid all that buy paying your CC bill in full each month.
A CC card, used conservatively, is safer than using a debit card and leaves your money in the bank for 30 extra days (although that doesn't mean much anymore with rates below 1%).
A lesson learned about the credit card interest on an existing balance!
Actually it should be a lesson learned on financial responsibility -- OPEN ALL YOUR STATEMENTS ALL THE TIME.
You have to check these things as you get them in. If you have paperless billing you STILL NEED TO LOOK....
Just had three transactions show up on our credit card that weren't ours -- someone had gotten hold of the number and cloned the card.
Hubby got a weird text message and the next bill -- there was now a 10 monthly service charge being applied to our account from some scam Hollywood gossip site.
Years ago, when I worked at the bank, I saw that same thing happen with checking accounts.
There are terms for this -- it's slamming or cramming. They are betting on you NOT reading your statements.
But the biggest thing to know -- after a certain amount of time, you don't get that money back.... because YOU have a responsibility to keep your accounts straight.
I had something similar happen with a credit card years ago. I had been diligently sending in my payments on time, every month and paying down a rather hefty balance. Finally, I had got the amount due down so low that I could just pay it off and be done with it. Yay!
I mailed the check in and the next month the bill came. I opened it expecting to see a zero balance. But instead I saw that I owed a small amount. Interest, ugh. I called the credit card company and asked them how much I should mail in - I didn't want to mail in a payment only to get yet another bill for interest on the interest...I suppose that could go on forever and ever.
The credit card company was great about the whole thing and they told me that I could consider my acct paid in full. The next month I got a statement with zero balance.
I mailed the check in and the next month the bill came. I opened it expecting to see a zero balance. But instead I saw that I owed a small amount. Interest, ugh. I called the credit card company and asked them how much I should mail in - I didn't want to mail in a payment only to get yet another bill for interest on the interest...I suppose that could go on forever and ever.
The credit card company was great about the whole thing and they told me that I could consider my acct paid in full. The next month I got a statement with zero balance.
They don't go on forever and ever, just the next month after paying one off (if you've carried a balance).
To the OP: that was an expensive mistake, as I'm sure you know now. That 30-day-late will stay on your credit report for 7 YEARS, and it is one of the worst blemishes you can have. If you were a really good customer, you might call the cc company, explain the situation, and ask if they will take pity on you and report "on time" instead. It's not likely, but it never hurts to ask.
There's no excuse for not opening your statements..even if you 'think' there's nothing due.
Lesson learned the hard way, but learned nonetheless
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