Another reason to pay your credit card balance in full every month: returns
There are several reasons you should pay your balance in
full every month. I recently discovered yet
another.
A few weeks ago, I purchased a converter box for my analog
TV. The experience was difficult and embarrassing, considering that few stores
still carry converter boxes and that I’m probably the only person in the world
who doesn’t have cable. (I haven’t had cable in over 10 years.)
After installing the box and antenna, I realized that I
couldn’t get ABC and that some of the other channels didn’t come in strong. What a waste of almost $80! I returned the box and accessories a few days
later, but I wondered if I would pay any finance charges to my credit card’s
bank during the time I had the products.
Here’s the answer. Let’s assume that my $80 transaction is the only
purchase on my credit card, and that the transaction occurred on the first day
of my 30-day billing cycle. If I had
waited too long to return the items—longer than my billing cycle—and hadn’t paid
my balance in full, I would have lost money. In other words, I would have paid finance charges
on my daily balance of $80. If my Annual
Percentage Rate (APR) was 15.9%, and thus my Periodic Rate was 0.04356% (APR
divided by 365 days), I would have ended up paying about $1.05.
So, in short, even if you a return an item and get a full
refund, you can still end up paying finance charges on the money you borrowed
from the bank. Just make sure you return items within the billing cycle you
purchased them.
Related article(s): [ How paying your bill early saves money ]
Greetings! I’m Kevin D. Johnson, a small business owner who has recently assumed the role of consumer advocate and internet activist. Atlanta, Georgia is my home.
Upon returning from my wonderful honeymoon in Jamaica last October, I received what I thought was an ordinary American Express bill, but to my surprise it was a disappointing letter informing me that my credit line was reduced by about 65% for a highly suspicious and discriminatory reason. Considering my excellent credit score and pristine payment history, it just didn’t make sense. However, what does make sense are the unfair and insidious policies that I have uncovered when asking why. It is time to change them.
I created this web site to document and share my challenging journey to change what is wrong, unfair, and unjust in the credit card industry. The ultimate goal of this web site is to inform consumers of ways to stand up for themselves against treacherous business practices and to educate consumers about how to improve their credit. Finally, I hope to encourage a more open dialogue with credit card companies about their policies–good and bad.
