I recently had an interesting run in with a customer service rep for our primary credit card. I thought I would detail the discussion here.
We had the misfortune of running a little short last billing period to completely payoff our primary credit card. It was just a timing issue as the bill was due the day before a paycheck came in and we were a little short. I figured this is no big deal really because we could pay off about 80% of it on the due date and then I would send in the leftover amount a day later. (We pay electronically so I can’t play the mail/check float game, but should have in this instance)
I figured we could handle the couple of days of interest for the 20% until it got paid off. No big deal. I should explain to you now that the way we budget our income is to put everything that we possibly can on our cashback credit card. (maximize cash back) If the card stays below our specified target balance each month we pay it off and then know that we are doing OK budget wise. This is a lot easier for us compared to tracking down every single penny like some people, and works well for us because we always pay ourselves first. Not mention that we typically use the cashback aware to pay for our Christmas presents so we automatically have a predetermined cap on that spending. Anyway, this leads to us having a large balance each month that we payoff, and have, since we got the card about 8 years ago. Except this time.
I thought that we would be charged a couple days interest on the remaining 20% balance and that would be all.
But then I got my bill. They had charged me interest on the entire balance, and on some of the balance we had racked up in the new billing period, and hadn’t given me any credit for my paydown. I was less than pleased with the situation. While I accepted that I would need to pay some interest on my remaining balance I have a real problem paying interest on money that I had paid them already prior to their imposed due date. Not to mention they are charging me interest on the money I haven’t even been billed for because they use the stupid average daily balance thing. So I’m being charged interest for money I have not even had a chance to pay them yet because they haven’t told me how much it was.
So I pick up the phone. After about 15 minutes (pretty quick I think for these companies) this is where we start.
CSR: How can I help you?
Me: Can you explain how you calculated the interest on my card?
CSR: Sure. You see the average daily balance figure on your statement? We multiply that by the daily interest rate figure and then add up each day’s interest and summarize it on the front page.
Me: Ok. But how did you get the average daily balance figure? It’s way higher than the amount I was billed for.
CSR: Well sir we keep a running tab of your balance each day and then multipy it by the daily interest figure and summarize it for the front page.
Me: I understand how you figured the interest. I have a Finance degree. I can do simple math. But how can you charge me interest off a balance that I haven’t even been billed for? Your average daily balance figure is a lot more than what you requested I pay you. How can I be charged interest on that balance when I haven’t been billed for it yet? On top of that, I was charged interest on a chunk of the balance that I paid you before the due date. Shouldn’t I only have to pay interest on the leftover amount from the previous month?
CSR: Well sir, we charge interest from the beginning of the month and waive it when you make your full payment.
Me: How can it even be legal to charge me for money I haven’t been billed for and on top of that give me no credit on my balance when I make a payment?
CSR: It’s in your cardmember agreement sir. That’s how we calculate the interest.
Me: Oh, that packet of legal mumbo jumbo you send me occassionally that no one but attorneys can understand?
CSR: Yes sir.
Me: Well that sucks. I’ve had this card for 8 years and this is the first time I didn’t pay it in full and you totally took me to the cleaners.
CSR: Sir, I would be happy to waive that interest for you if that would make you happy to be a cardmember.
Me: (Good answer) Yes, that would make me very happy.
CSR: OK. Hang on. (Pause) Sir, I waived that interest and also the residual interest that would have appeared next month.
Me: Great. Thanks. Have a nice night.
Ha! Take that credit card company! You’ll get no interest money from me! I know why they did it. The percentage kickback they get from each retailer we use our card at equals more than this amount of interest in about 4 months. They just want me to keep using the card so they can get their 2.5% of each dollar I spend, or whatever the amount is.
I just found it humorous that they caved on the interest so quickly. I mean, they are in business to make money right?