If you think you know what your credit card company charges for a late payment, take another look. You might be shocked!
Capital One posts their interest rate as 27.24%. But look at this statement. Because this consumer was late, Capital One is charging over 70%!
Top line shows the balance was $41.17.
Sixth line (underlined) shows the fee charged is $29.00.
$29 = 70.4% of $41.17
I think that is outrageous, and I hope this goes viral.
It means the consumer is paying $70.17 for an item that cost $41.17. That is a terrible deal, no matter how you look at it!
I suggested that the consumer call Capital One and ask not to be posted 30 days late to the credit bureaus, because she has never been late before and has a perfect credit history. Getting docked 100+ points on her FICO score would hurt more than $29.
Here is the Conversation with Capital One
Cap One Rep: Sorry, we have to report it as late to the credit bureaus.
Consumer: I have a perfect credit history with you. Could I have this one grace?
Cap One Rep: No, we can’t do that.
Consumer: I would like to talk with a Supervisor (following the script in Repair Your Credit Like the Pros).
Cap One Rep: It won’t do you any good. She’ll just tell you the same thing.
Consumer: Nevertheless, I want to talk with a Supervisor.
Supervisor comes to the phone and Consumer asks again.
Cap One Supervisor: We won’t report you late to the credit bureaus. I apologize for what our customer service representative told you.
As a bonus, she waived the late fee. It seems the Supervisor was more interested in good customer service than the representative. It is a good thing she asked! Doing so saved her money and grief.
Scripts for how to negotiate with creditors are in the book. They are based on my own experience in negotiating for my mortgage clients in the past. I do not negotiate for consumers now, but there’s no reason why you cannot D.I.Y.
Setting up automatic payment to pay off your balance in full each month is a good practice. Don’t waste your hard-earned money on outrageous credit card interest. It’s not even tax deductible.
Don’t worry about the credit card companies making a profit. Even if you don’t pay them a single cent, they make money by charging the merchant or seller.
Please help get this education out to good folks: If you don’t pay your balance in full each month, you are paying too much! And if you accidentally go late one month, call immediately and get it resolved before it gets reported to the credit bureaus.