[Peter McKenna]

Hello,

I have recently paid the entire balance of a credit card in full and within the due date of the bill. However, although paid in full, the subsequent bill states that I owe a finance charge. I called the bank and the customer service representative stated that I owe a finance charge on the average balance from the period between my last payment (prior to the payment in full) until the payment in full was made. On the back of the bill, in a statement entitled "Information about your account", under "explanation of finance charges", it states " However, the daily balance for previous billing cycle purchases is considered to be zero for each day of the previous billing cycle if a periodic finance charge was already billed on purchases itemized on your previous statement or we received payment of your New Balance on your previous statement in full by the date and time your payment was due."

When I said that my interpretation of this statement was that I should not be charged any finance charges since I paid off the card, the customer service representative stated that I misunderstood the statement, and since I have a revolving credit account, the consideration that my finance charges from the previous billing cycles is zero, would apply if the previous balance was zero (i.e. if I paid the card in full previously, or always paid the balance in full). I pointed out that these words were not present in the statement. The rep. said that it didn't matter anyway, I was reading information only provided with the bill and the cardholder agreement (which I can't find and have asked for a copy) provides the only binding terms.

It also states in this statement (on the back of the bill), under "In Case of Errors or Questions About Your Bill", "If you think the bill is wrong, or if you need more information about a transaction, write Cardholder Services, .... , as soon as possible. We must hear from you no later than 60 days after we sent you the first bill in which the error or problem appeared." Also, "You do not have to pay any amount in question while we are investigating, but you are still obligated to pay the parts of the bill that are not in question" ... and "While we investigate your question we cannot report you as delinguent or take action to collect the amount you question." I told the representative that I was going to write them of what I believe is an error on their part, in that the fincance charges should not be charged since I paid off the card in full and by the due date. The representative stated that this term does not apply to finance charges. Again, I pointed out that what he was telling me is not in the statement.

The representative stated that I was misunderstanding the terms of the credit card and what he was telling me is are the terms. I asked him to send me all of this information in writing, including the fact that I cannot question the finance charges. He said that he would.

I have paid the balances of credit cards in the past and even had a couple of the associated banks try and charge finance charges on the "average balance" before, but when I pointed out that I had paid the card off they cancelled the finance charges.

This bank (I've spoken to two reps. from this bank and they say the same things) however, is sticking to their story. It does not seem legal. What alternatives do I have? If I do anything but pay, they will at least damage my credit. This is a major US bank by the way.

Thank You for the help.

PM

[aaron]

Credit cards pull all sorts of tricks like this to maximize finance charges.

Citibank, for example, recently sent a mailing to cardholders indicating that it is building a 3% finance charge into charges made in a foreign currency, but that the finance charge will not appear separately in the bill. (That is, most people looking at the charge would think, "that was a bad exchange rate", but not, "why was I charged a finance charge for that purchase?") It's incredible - but banks have really good lobbyists, and they get away with this type of thing.

You should review the full terms for your card - and rather long and dense document, but available from the credit card company - to see if in fact you are contractually obligated to pay the charge. You will likely find that this provision is in the contract. (You will likely find similar provisions in most credit card contracts.)

Sometimes, the first time something like this happens, with enough complaining they will agree to waive the fee. If that doesn't work, I suggest telling them that their refusal leaves you with no choice but ot cancel the card and, if they stick to their guns, cancelling the card.