Hidden charges on credit card bills!

WHEN dealing with money transactions, a sudden change can catch you unaware. Take for instance your credit card. You may suddenly find that the due date on your credit card has changed without any intimation and you are late in making your payment. Take the following case.

Rita's credit card statement is generated on the 15th of every month and the payment has to be made by the 6th of the next month. She made the payment in the same cycle but was shocked to find that in the next statement she was charged Rs 350 as late payment fee plus Rs 450 as interest. So, she called up the bank for clarification and reversal of charges.

What exactly happened with Rita?
To avoid late payment charges, you have to make the credit card payment on the date specified on the credit card statement. The time between the statement generated till the payment date is the time that is credit free. This means you can make purchases on your credit care without bearing any charges. Generally, the credit free days range between 15 or 20 days.

However, the bank holds the right to change the cycle of the payment anytime. That's exactly what happened with Rita. Her bank changed the repayment time for the credit card by seven days. This means that the 21-day period came down to 14 days, reducing the time available for making the payment.

Why the sudden change?
This usually happens when a bank wants to decrease or increase the credit period. In most cases, it is usually the former as the funds of the bank are utilised by its customers for less time period.

Should a bank intimate about the change?
A bank has to inform the credit card holder about any change in the payment date and billing cycle. The exact manner of the intimation will be specified in the code of conduct of the bank and every credit card holder has to check for the details. In some cases, even though there might not be a clear mention about the reduction in the time period, the change in the due date is intimated in some way or the other. In many cases, the bank changes the payment date after changing the conditions related to the credit card and you many not even know the connection between the two.

Rita's last card statement had the details about the conditions of the card where the change was made, i.e., her 21-day interest-free grace period was reduced to 14 days. But she ignored it and did not even look at the latest statement for the exact payment date.

Can the charges be avoided?
The bank's argument would be that the change in the date was informed through the changed conditions and again through the credit card statement. But if Rita wants, she can still complain to the bank and ask them for reversal of charges.

Depending on Rita's relationship with the bank, the charges could be rolled back. But if the bank insists that adequate procedure was followed to intimate the customer then the charges will have to be paid.