I don’t often post follow-ups to previous articles, especially after just a few days. But following Tuesday’s post on two-cycle billing, a couple of things happened that deserve mention.
Understanding Grace Periods
Several readers suggested that what I experienced was not two-cycle billing but the lack of a grace period. Special thanks especially to Kitty, who linked to the American Express document on understanding grace periods. Kitty writes:
If you didn’t pay your previous month’s bill in full, grace period no longer applies, and you are charged interest ON ALL NEW PURCHASES until you pay another bill in full. After you do it, your grace period starts to apply again, but you still have interest that accrued on all new purchases you made in the meantime.
So, when I accidentally paid my credit card bill $100 short, the grace period for the next billing cycle went away. In order for me to regain my grace period, I’d need to pay the bill in full two months in a row. This isn’t two-cycle billing, despite what the Capital One customer service rep told me.
A Call from Capital One
Meanwhile, Kathy from Capital One customer service left a comment:
Please note that Capital One does not use two cycle billing; we never have. Two cycle billing is when a company computes finance charges on the average daily balance of the last 60 days rather than just the last 30 days. What that means is that they will go back two billing periods before the cardholder sent in their payment, and average the daily balance of all 60 days.
Capital One does not use two cycle billing. If your closing was today for example, we would stop, go back 30 days, and take the average daily balance of those last 30 days, assess finance charges and then send out your statement. This is one-cycle billing.
Kathy was able to track down my account information, including my phone number, so she gave me a call. We had a pleasant chat.
She confirmed that what GRS readers had suggested — that the issue was with the lack of grace period — was, in fact, correct. Kathy explained that with two-cycle billing, the credit card company computes the “average daily balance” (which is what they charge interest on) not just on the current month, but on the previous month, as well. That’s not what happened in my case.
In my case, when I mistakenly paid my bill $100 short, my account began to accumulate finance charges. During the second month, I paid my bill in full. But because I was carrying a balance, the grace period for that month didn’t apply, which means I still accrued finance charges. Again, the only way to get rid of finance charges is to pay my bill in full two months in a row.
I think I understand things now.
During our conversation, Kathy offered to refund the finance charges I had accrued — not just the second month’s finance charge, but the first month’s charge, as well. I felt almost guilty accepting this offer, but I did so.
Conclusion
Now, I realize I’m in a sort of special position. I have a public blog that gets enough attention for Capital One to notice and respond to my complaint. Most people don’t have that sort of leverage.
Still, I’m grateful for the way Capital One handled this, especially considering the entire thing stemmed from a stupid mistake on my part. I’m not about to become a spokesman for Capital One, but I’m satisfied with the way things worked out.
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I am going to second what Mo #20 stated. These companies don’t care about the ‘small’ guys. As soon as they find out someone has an audience or can infulence people to accept their products they will do whatever they can to make it ‘pleasant’ for them. The woman looked up your information and contacted you. Wow! It must be nice. But if you were a regular ‘joe’ guess what?? You would never have been refunded that money and as you stated clearly “It was your fault”…….
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J.D., thanks for posting your experience here. I think it was enlightening and interesting, and the follow-up was great.
For the record, I think that the “troll” -like comments can just be removed. Trolls are very ego driven. Once they see they are not even being published anymore, they will move on to the next website. They really bring down the level of conversation, and while your articles are always great, the conversations and comments I see here are a big draw for me as well.
Maybe you can do an opinion piece here on how to handle trolls, and let the readers decide?
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Isn’t anyone else concerned that not even the people WORKING for Capital One can understand their billing policies?
What chance do us customers have?
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Don’t feel guilty accepting the refund – I usually pay my card in full on time – on the rare occassions I’ve made a similar mistake my Cc company has ALWAYS extended me that courtesy because they can see my history on line
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Wow! I can’t beleive all the negative comments
JD: Thanks for your transparency. Your ability to publically admit when you’ve made a mistake is refreshing. Also, I’m glad you realize the type of influence you have — that is something that is earned and should be leveraged carefully.
Keep doing what your doing!
Kita
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From the other post JD was pretty open that he was not assertive when he asked for his charges refunded. I think its a good example of how someone might not be comfortable being assertive in one method of communication (and being penalized for it!) but being talented at explaining yourself in writing (on his blog). In general, people that are comfortable negotiating in person have a very high advantage financially. So you don’t need to have a blog!
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I don’t recall the previous article specifically, but I don’t think JD originally asked for the finance charge(s) to be refunded. If he had, they probably would have done it regardless of what he does for a living. If you have a good reputation of paying on time with the company they will always give you at least one forgiveness and refund, sometimes more.
If the person you talk to the first time won’t refund you, say thanks and keep calling back until you find one that will. I have had finance charges reversed and 0% interest reinstated, etc. a few times now just by picking up the phone and being polite and persistent. The cc people know the difference between mistake and delinquent- you just have to find one that is sympathetic.
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YAY!
I’m stoked for you JD – that’s awesome.
I know that you probably would not have called back and tried to get the refund – so this worked out great!!!
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I appreciate that you posted this follow up to your earlier article. I actually learned information on double cycle billing and grace periods that I didn’t know before – so it was helpful.
Doesn’t every job have to have some perks???
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Please don’t support Capital One: they target low income earners, have shady business practices, and have NEGATIVE Tier 1 capital (they are bankrupt)
Your helping them by having a card, and paying their balance…
I can’t believe your support them on a site about frugality…
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Wow, what’s up with all the spite in the comments all of a sudden? OH NOES, did a blogger just admit that he’s now all-knowing and infallible? Admitting and correcting a mistake does not make him a shill, nor does it make him a bad person.
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I haven’t fat-fingered amounts yet (I try to copy-and-paste rather than retype when possible) but I’ve screwed up and made a payment late. My understanding was that I could stop having to pay finance charges on new purchases by paying the full current balance. I.e. whatever I missed from the last statement plus whatever I’ve spent since then. In other words, bringing the account balance to zero would restore the grace period on all subsequent transactions.
I could be wrong about that, because it’s only happened a couple times and I don’t think I did the math to determine whether I’d been charged interest on purchases after I paid the full balance, but that was my understanding.
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Thats great! They seemed to have handled it nicely.
I’m still peeved at them though, they raised my interest rate “because of the economy” and would not lower it. I’ve been their customer for 8 years, pay on time and more than the minimum! They still wouldn’t do it….. =(
Glad you had a positive experience though!
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OH! and I would have been none the wiser if it wasn’t for Mint notifying me they did so!!
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If you don’t
pay late and are not usually behind, most credit card companies will refund late fees and finance charges at least once a year if you call and ask.
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I did not read all the comments, but I believe if you had been a bit more persistent you would have had the charges removed in the first place. Having the blog is just you being more persistent. My wife and I have made mistakes like this before, and we always call and have the charges removed. We just talk about how good of customer we are and have been, and then tell them it would be a shame to take our business elsewhere.
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This makes me feel a little squicky about both Capital One AND the customer in question…. They weren’t going to refund you until they knew you had a blog and an audience, and you didn’t feel right about asking for a refund, but once it was offered, you accepted. A little ethically wobbly on both sides.
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Just another example of how the rich and famous get away with murder. Thanks to Capital One for pointing this out. I agree with others, I have a more negative view of Capital One now.
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I think you people need to all get a life and leave JD alone. Every single one of you (myself included) would do the exact same thing in terms of reversing a credit card surcharge. Whether or not we manage to get the charge reversed, due to any kind of “status” or “unethical grey areas”, is moot as this is not the issue. The issue, is the charge itself and JD not understanding why it happened. Besides, who cares… it’s a credit card company. A CREDIT CARD COMPANY! I hope they lose $25 and a two million more… complete with 18% interest
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Good for you for getting a refund.
One way or another — whether the mechanism was double-billing, whether the first CSR didn’t know what he was talking about, or whether an incomprehensible and irrational policy on the grace period was hidden in submicroscopic print — you still got gouged. Given the concession, Capital One evidently knows it.
And readers should proceed with caution in doing business with this company.
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@Tom, I would feel much better about JD’s decision if he would donate the reimbursed finance charges to say someone named Tim. I guess I could accept a consolation donation to a charity, too.
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Good grief…a lot of amateurs with inflated egos are spreading misinformation on this site. Be careful. . .aka buyer (reader) beware. Actually, it’s a real hoot.
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So let me get this straight… some of the readers here can’t handle their finances and it is the other persons/lenders fault?
it is always some one else’s fault, isn’t it?
… the credit card company charged you over the limit fee, late fee etc. but you never cared reading the contract and honoring it, did you?
… the cell phone company charged you overuse fee..well you couldn’t keep track of your usage?
… You cant pay your mortgage so you are going to default and drag all your neighbors down with you… Who forced you to buy an over inflated property in the first place? was renting not stoking your ego enough? didn’t you get greedy as well?
…so and so on…
The only common thing I see around here is that every Company out there is evil and out to take your money… but I never see people owing up to their responsibilities. Nobody ever accepts their own mistakes anymore. The same thing is reflected with our politicians. They are no different from you and me….it is ALWAYS some one elses fault.
So sick of hearing you people complain.
The whole point of JD’s blog was to show you people to be careful about YOUR finances, be responsible and keep YOUR S#$% together and learn from his experience. Instead it’s been turned into a forum to bash the lender, bash JD for being a shill, bash everybody but yourself. Why is it forgotten that you asked for that money to be lent to you? You agreed to pay it back, or pay interest on it…simple. if you can’t pay back what you borrowed, it’s YOUR fault.
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This is a wonderful blog JD, I have been a long time reader and I am happy to say I have passed it along to a few friends. It is nice when you have the traffic to get the big companies customer service departments to notice you, I am happy this got sorted out for you! Thanks again for all of the helpful information here.
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Whenever dealing with a customer service person (especially from a health insurance company, follow the above advice about being polite, but also ask every person you speak with for their name and ID# “for my notes on our call today so I can remember our conversation clearly.” I actually take careful notes during every important customer service call and it helps a great deal as I climb the ladder and eventually speak with a manager.
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I just stumbled upon your blog through google, and I wanted to thank you for posting this info. Your post did a much better job of explaining their fee structure than their own representatives. I recently found myself in a similar situation, and I just spent 30 minutes on the phone with 2 representatives trying to get a clear answer. Unfortunately it seems like many of their own representatives don’t fully understand the finance charge structure and blindly read off of their scripts.
I’ll try to follow the advice above about getting the fee’s reversed, but I’m not getting my hopes up. If only all their reps were as knowledgeable as Kathy.
Does anyone know if other banks follow a similar way off removing the grace period if you are late on a payment? I remember occasionally missing payments in the past with other banks, but I don’t remember getting dinged this hard with fees.
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New York Times article “Maybe It’s Time to Change Credit Cards” http://bit.ly/grs_nyt1
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Re: Kevin (#53). I agree. The fact that the company’s own customer service rep gave a complicated yet completely inaccurate explanation is disturbing. That’s not just Capital One though. It happens all the time, and there really doesn’t seem to be any significant consequences for customer service representatives just making things up.
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JD – don’t fret about errors – that’s the way you learn, and we learn with you. Please cover the stuff that is your daily “frontline” effort, be it error riddled – then listen to feedback, add corrections to the main text, post followups and link them in the original message – that’s the way you did here and it is the best way.
The newspapers are written in paper and it is harder for them to correct mistakes – net is fluid and allows for corrections.
So dive into whatever fancies and interests you – This makes the content unique and compelling – and gives us the opportunity to give our examples and advice – binding us even more to this place.
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