I got caught out! Here is what I learned the hard way about credit cards and interest charges on late payments.
Mea culpa, through simply not paying attention, I was a day late paying the full balance. Of course, that means interest is charged and not just for the one or two days that payment was late but for the whole time since the purchase date up to the payment date. That hurts, especially considering the usurious interest rates (mine is 19.5%) charged by the card companies, but hey it was my fault. Note to lawmakers and regulators – why is it impossible to set up a pre-authorized chequing payment for the full card balance on the due date so that late payment charges cannot happen at all?
What really aggravates is the gratuitous punishment applied by M2 type credit cards. Read this excerpt from a typical cardholder agreement (in this case a TD Visa card):
“You will lose your interest-free status on all Purchases and fees if we do not receive payment in full of your Balance by the Payment Due Date shown on your current statement. We will then charge interest on all Purchases and fees that appear on that month’s statement as well as all new Purchases and fees. Interest will be charged on the amount owing to us from the transaction date until that amount has been paid in full.”