Pay your credit card in full

From time to time, we receive complaints from complainants who have issues with their commercial Banks as it relates to the payments and interest incurred on their credit card. Many of us use our credit cards to pay our monthly bills; for online shopping and to purchase items like furniture and appliances. What we fail to realize is that a credit card while useful and convenient for many reasons, operates like a loan facility. If you default in payment or do not pay back in full, there are consequences that you the customer must face.

A credit card attracts a relatively high interest rate which varies according to the type of credit card chosen and the commercial banks that issued the said credit card. Your outstanding balance can earn no interest if it is repaid in full before the due date. If however, only part payment is made before the due date, the balance will attract the interest rate and this will continue until the card is paid off in full. It is your responsibility to manage your finances in order to be able to pay your credit card in full on or before the due date.

For example:

  1. If your bill date is on March 31st and your payment due date is on April 20th and you make a purchase on March 1st, once payment is made in full before April 20th, you will attract no interest. It follows that any transaction conducted before March 31st becomes due on April 20th.
  2. With the same information above, if a purchase is made on April 1st, this will be billed to your new cycle and will therefore be due by May 20th, thereby giving you fifty (50) days to pay the outstanding amount before interest is added.
  3. However, with the same information in (1) above, if instead of repaying the card in full on April 20th, you only make the minimum payment or part payment, interest is calculated on the total purchase from the date of purchase until it is repaid. In addition, any further transactions on the card, before the existing balance is paid off, add to the original purchase amount and interest is then calculated on this new amount. While the card attracts an annual interest rate, interest is actually compounded daily to the account.

In addition, when you use your credit card at the Automated Teller Machines (ATM) to withdraw money (cash advance) you incur a fee of 2%- 5% for each transaction.

Management of your money and your card will prevent issues of debt and over spending. Complainants should be aware that poor repayment of their credit cards’ balances may be reflected on their credit history, which is a record of a borrower’s responsible repayment of debts. Poor credit history ratings may affect customers’ ability to obtain credit cards or secure an increase in the credit limit of an existing card. Your credit card should be treated as a loan and as you budget to pay your other monthly bills, you should budget to pay back your credit card in full on or before the due date.

If you have a query on your card, we encourage you to speak directly with your bank representative and ensure that you fully understand the payment terms and conditions of your credit card. If you are not satisfied with the service provided by your bank in dealing with your issue, then visit our Office where one of our Resolution Officers will be available to discuss your matter as long as it falls under the Terms and Reference under which the OFSO operates.

Our Office can deal with issues related to deposit and loan accounts, investment services, trust accounts and mutual funds. However, we do not handle complaints that are related to interest rates, fees and charges, risk management policies or pricing of products or transactions that have occurred prior to January 1, 2003.

For more information download the booklet Dollars and Sense which gives more in depth information on credit cards and other banking transactions.

 

 

 

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