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Late on Your Credit Card Bill? You May Be Able to Avoid Default Rate

You just realized that you forgot to pay your bill and it was due yesterday. What do you do?

Pay it and call customer service immediately.  They may be able to help you out, especially if you have been a good customer and are cordial on the phone.

There is probably a grace period on your account. Understand that this has nothing to do with how late your payment can be without adverse action. Grace period is how long before the credit company starts charging you interest on new purchases (typically 25 days).

With most credit cards, if you are late on one bill, you are charged a late fee and in a lot of cases you go into default status (which among other things means a higher interest rate). The late payment is also reported to your credit reporting agencies (TransUnion, Experian, and Equifax).  Sometimes things just get forgotten and credit companies realize this. But remember, it is also how they make the most money!

Credit companies make money in at least two ways. The first way credit companies make money is to charge merchants a percentage of the sale to accept credit (although I am not sure if this is split from VISA, MasterCard, etc., down to the credit companies or not but I imagine they get a slice). The second, and more important to you, way they make money is from what they get from you above your purchases (interest, fees, etc). They make money when you OWE money to them.

That gives you the consumer some bargaining power. They have a product and you can choose to use a product with another company if they won't work with you. Your bargaining chip here is to tactfully tell them that if they default your account, you will just transfer the balance and they will not make any more interest off of you.

There are at least four rules when dealing with customer service

  1. Be cordial and always say "Please" and "Thank you." You will find a little goes a LONG way.
  2. Be direct about what you would like to achieve when the exchange is complete. Sometimes asking a simple "Is there anything that you can do to help me out?" goes a long way.
  3. Be persistent. If you find you are not getting help from the person on the other end, thank the representative, hang up, and call right back.  The representatives are human and getting a yes in most cases is very subjective to how friendly the rep is feeling and how you connect with them.
  4. Follow up. Always follow up to see that you received the benefits you hoped you would receive. If you didn't, remember rule number 3.

Print | posted on Tuesday, September 23, 2008 8:23 PM | Filed Under [ Personal ]

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# re: Late on Your Credit Card Bill? You May Be Able to Avoid Default Rate

You mean screaming at the operator to f-off and throwing the phone across the living room isn't the right way to do it?

Seriously though CitiBank is scum :-)
9/24/2008 11:46 AM | Ryan
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