Credit Card Billing Cycle Mishap

This morning I received a call saying that my American Express credit card was past due and that it was being put on hold. How can this be?

First I will give you a little background on my card. In October I decided that I would like to start paying this card on a weekly basis rather than monthly. This would allow me to pay off this card in a shorter period of time. You can look through some of my old posts for more on how that works. Once I decided to pay weekly, I took what my minimum amount due was and divided that by 4. I then added $10 to that amount. I then proceeded to go into my Washington Mutual account and schedule auto bill pay to send a payment weekly. Everything was now on auto-pilot and worry free. Wrong!

Each week I would receive an email from American Express saying “Thank you, your payment was received”. Everything was going as planned. That is until I received the phone call this morning. It seems that I had received a late charge each of the last two months and my interest rate had shot up to the default rate of 27.99% due to these late payments. I immediately printed out all of my statements since October in order to find out what was going on.

In October prior to starting the weekly auto-pay, I payed the minimum payment bringing my account up to date. I then started my auto-pay 3 days prior to the October bill being due, so I actually payed 125% of my minimum prior to the October bill being due.

As I looked at my statement for November, my due date was 11/27/08 and I clearly see 4 payments being accepted between the 10/27/08 due date and the 11/27/08 due date. Everything looks good. But wait, I also see a $38 late fee. The fee was tacked on to the December minimum that was due along with an enormous increase in my interest rate. With these new additions my 4 weekly payments did not cover the December payment and I incurred another late fee!

I called American Express back after reviewing my statements. I explained to them that I had made 4 payments prior to the 11/27 due date that exceeded the amount due, but I still was penalized. As they went through my account they told me the first of the 4 payments did not count towards this bill, because it posted on 10/31 so it went towards the previous months bill, which was already 125% payed. I asked them if the 10/31 payment which was after the 10/27 due date, should go towards the 11/27 payment? The answer was no. Looks like I had misunderstood the monthly billing cycle definition. My billing cycle is not from due date to due date, but rather for the month.

I was sick to my stomach. I thought I had been paying on time. I was sending enough to cover the minimum payment and then some. But now I was being penalized. Although the late payment was completely unintentional on my end, in their eyes it was late.

After talking with two separate customer service reps, they are supposedly reversing my late fees and have put a note on my account. I will know in 48-72 hours if my rate will return to what it was prior to this whole “misunderstanding”. I’ll update this post when I know more. The purpose of this site originally was to help you learn from what others have already done wrong. Take my advice, even on auto-pilot check your statements and know your billing cycle! You don’t want something like this happening to you.