Consumer Payment Card News

Fatal Mistake

If you think the only hassle with making a late credit card payment is a $30+ fee, then you better think again. Credit card issuers will use a late payment as a basis for jacking up your interest rate to the stratosphere and for wiping out any rewards you accumulated with the card. The triple whammy can be fatal to your credit card account. Charge cards can be especially brutal. American Express and Diners Club charge cards, which do not typically carry interest charges, assess exorbitant interest rates, plus a fee for accounts past due. Both issuers will hold your “Membership Rewards” or “Club Rewards” points hostage unless you pay a reinstatement fee. On top of this, charge card issuers may close your account for good. Diners Club recently adopted a new policy that says if they cancel your account “all unredeemed points accumulated will be permanently forfeited.” Diners Club also charges a late fee equal to 2.5% (30% per annum) of the past due balance, plus a delinquency fee. This means if you carry a $5,000 balance and miss the 400pm (ET) cut-off on the payment due date, you will be charged $125 for a late fee, plus a $30 delinquency fee, or $155 total. Diners will also freeze your “Club Reward” points, until you pay a $15 reinstatement fee. If you do not bring the account current within 30 days you will likely be canceled and lose all your “Club Reward” points for good. Best advice: do not play the wire with the payment due date — it could be one of stupidest things you ever did.

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