Monday, February 09, 2009

Bank Credit Cards and the Moving Due Dates Scam

by Barbara Sowell cross-posted from Digital Journal

Many banks have deliberately designed billing systems to periodically generate payment due dates that are 5 to 6 days earlier than normal in an effort to catch automatic bill payers in a missed due date scam!

As soon as the earlier than normal bill pay date is missed, your credit card interest rate will zoom up permanently and you will be assessed a whopping late fee.

In May of 2008 the Federal Reserve adopted new rules that will make sweeping changes both good and bad. One change will permanently ban this practice. Keep in mind, however, that rules adopted by the Federal Reserve won’t go into effect until July 1, 2010.

Here’s a summary of the changes from an article in Tulsa World by Julie Delcour.

New protections in store: Even before the worldwide credit crisis struck, the Federal Reserve Board had been working to adopt new rules that might not protect consumers from themselves but would protect them from some of the worst abuses by credit-card issuers. These new rules would stop companies from arbitrarily hiking interest rates on money already borrowed and hiking rates on customers who had never made a late payment and kept accounts current. The regulations also stop issuers from charging late fees if bills to cardholders arrived less than 21 days before payment is due. The rules would nix "universal default," a smarmy practice in which one issuer raises the interest rates if the consumer makes a late payment on any other credit account for any reason. But the FED rules won't go into effect until July 2010, an unacceptable delay.

Two years ago I wrote an article, Bank of America’s Latest Credit Card “Missed Due Date” Scam on my blog. The article dealt with the mechanics of a problem that many people are likely to encounter if they have a bank credit card and also have a good payment record. The follow-up article, You and Credit Card Due Date Roulette, explains how you can pay one credit card late and suddenly all of your credit cards make an outrageous jump in interest rates!!! It’s called the Universal Default Clause.

Thanks to contacts from readers and new comments left on the articles, I have become aware that the problem isn’t going away. It’s growing.

Last month I received this comment:

BOA is back at it again. Just paid my card off last month and found out today that they moved my due date up one week without any electronic notice!

Of course the banks will tell you that it isn’t a scam. They will explain that for accounting purposes, they must sometimes squeeze payments in order to get twelve payments within the year. But ideally Banks should give ample notice to credit card customers when they anticipate a future jump-back in due dates.

My friend in the BOA article found a manager who was able to correct the situation. After reviewing his excellent payment history, the manager agreed to correct the situation by removing the late fees and returning the interest rate to the earlier low rate.

Money Under Thirty recently wrote Consumer Alert: Citi May Move Your Due Date Without Notice, an article about the same practice at City Bank. Apparently calling and complaining worked. “They moved the date back and assured her there would be no late fee. Thank goodness.”

Yesterday the Sacramento Bee has an excellent article Personal Finance: You can fight credit card changes with some wonderful tips on how not to get caught in the new credit card clamp down. Here’s a short introductory excerpt:

From American Express to Washington Mutual, card companies are getting tougher on terms: Credit lines are being yanked. Minimum payment amounts have jumped. Interest rates are doubling. Card transactions are being declined. . . .

Credit card companies are getting hammered by the same financial pressures affecting their customers. Faced with rising rates of delinquencies and defaults, they're trying to cover their losses. Meanwhile, cash-strapped consumers and small businesses – battered by job losses, layoffs and rising costs – are tapping their credit cards for even basic spending. . . .

The good news: Under rules adopted in mid-December by the Federal Reserve, banks will no longer be able to raise credit card rates without good reason and must give you more warning – and in type that's more prominent and visible on your billing statement.

The not-so-good news: Those changes won't take effect until July 1, 2010. (For details, see "Credit Card Relief.") . . .

Be cautious on closures. Lots of fed-up consumers want to close their accounts. But experts warn it can backfire. . .

So until the new rules go into effect in July of 2010 expect to face more of these problems with your credit cards and remember that you may be able to successfully fight the moving due date scam.


  1. "Of course the banks will tell you that it isn’t a scam. They will explain that for accounting purposes, they must sometimes squeeze payments in order to get twelve payments within the year."

    Obvious nonsense. The fifth of the month comes twelve times a year, very reliably. So does the fifteenth and the third and the twenty-fifth of each month, and so on.

  2. Very true jay. The banks will use any excuse to get a buck out of you. They will lie to do it. Best thing is to pay off your cards, cut them up and use only a Check Card. If you don't have the money, you cannot afford to buy the thing.

  3. I'm not sure all the credit card companies do this, at least I hope not. The moral of the story is don't assume anything and always check your accounts regularly. You can do this at most places online.

    Debbie Hamilton
    Right Truth

  4. This is terrible practise. I think the best solution for this would be to pay up the credit cards, keep just one for emergencies and use only debit cards or checks. That way they can't get to you. It's horrible how we all got used to living on credit!
    Take care,

  5. I have a BOA credit card that I have had for several years. I always pay my statements online. I rarely even open my paper statements.

    BOA now ALWAYS puts my credit card due date on a weekend at the end of the month. For example, this month my payment is due on the last saturday of the month. Monday is the 30th and Tuesday is the 31st, but they made my payment due on Saturday the 28th.

    So if I don't check the calendar and see what day of the week the 28th is, and I try to pay online on the 28th, then its late and they can hike up my interest.

    I beleive this is another "scam" they are pulling to default peoples interest rates to a higher rate. They make your payment due on a day that you can't pay it online and not be late.

    My payment has been due on a the last saturday of every month this year now. SCAM????

  6. Wow. This just happened to me. I have an excellent credit history, I have never missed a payment. I own two cars, a house (which is worth more than I paid right now...), fully max out my 401K, and have paid off all my student loans. Needless to say I am financially responsible and savvy. I handle all my bill payments through my bank's bill payment program, and have never had a problem. Three months ago I got engaged and put the engagement ring on a no-interest 6 month credit card. I travel out of town for two weeks and returned tonight to check my mail. I was SHOCKED to learn that Bank of America (pet reward card, 0%APR, 6mos) moved my payment date up EIGHT DAYS! Because my bill pay service is electronic I only need to pay TWO days in advance, so I pay with a buffer of 5 days. Even my buffer didn't help in this latest payment cycle. I am FLOORED that BofA would pull such as low stunt to try to collect extra dollars. Needless to say I'm going to call tomorrow and rage, and if they don't get it resolved I'm going to pay the card off in full and cancel the account right there. Luckily I can resolve this by giving them the finger and paying off the card in full, but I really feel bad for people who don't have that opportunity, and really get screwed over by the bank. The fact that they will do this to people who can't recover, and will hurt their overall finances, is ridiculous! If they get my problem resolved, I will come back to this site and let you know.

  7. I also encountered the same problem and the same story with the customer service rep. She offered to take off half of the $39 late fee. I took it, but also told her I would be paying off my bill and closing the account. I just closed it today after the payment cleared. Now, I am a little worried. My APR was 4% and I had a 20K limit. I'm wondering if I stupidly just fell into their hands. They were nice as pie when I closed the account. It seems they wanted me to go away and found just the way to do it!

  8. This has just happened to me. After a solid 18 months (that was as far back as I pulled my old statements) of a due date on the 26th or later, I made my payment on the 22nd but was slapped with a late fee of $39 on the 21st. I phoned customer service and was told that the 21st was the due date set up on my account and that all those months of the 26th or later was the "varying" of 5-6 days that their rules allow. They refunded me HALF of the late fee. Seems even when they get caught, they still make money.

  9. This just happened to me to. I even have SMS reminders and other reminders in place to avoid this, but the reminders are set for a date, so I would miss the dates. I called customer service and was given the same story about fluctuating billing dates but by this time it had turned into a monthly thing. One month the bill is due on the 10th, the next month it's due on the 5th, month after that its due on the 8th! Absolutely zero consistency -- even my reminders were not working to keep up. By creating this atmosphere of confusing the client they rack up late fees than increase the interest as they see fit. My interest had been jacked to 20% in the interim as I would miss the dates.

    I checked my other cards as well and yes, due dates change once in a while by a day or two, but the difference with BOA is this incipient need to screw the client over by constantly changing the bill due date. We're talking about every single month, even if the bill cycle is identical to the one before -- which doesn't add up with what they said, "Due dates change based on billing cycle." Their claim is just patently incorrect on so many levels.

    I've ordered the BOA credit card to be cancelled and will never do business with them again. I highly recommend others do the same.

  10. I just found this blog after my wife was screaming in anguish and frustration because she just discovered her due date had been moved yet again (and causing a late fee - Oh goody!)

    I guess that's why the card name is Discover! W00t! Discover the $25 or so "Bonus" we get this month just by moving the date! It's magick!

    I pity those responsible. Karma gets you each and every time without fail.

  11. This has happened a few times to me and it is obvious when you chart the closing dates and due dates what they are up to. The thing about SUnday payments is the latest twist.

    This practice is very eady to document by going back thru your statements. There is absolutely no reason for this other than to rip off you, the customer.

    So the obvious thing is not to do business with this company. I am closing my two accounts and will never again do business with a company like BAnk of America. But this is not an option for some people.

    What makes this worse is that the CEO of BOA told a shareholders meeting, bragging, that he was going to do just this type of thing to increase profits.

    For myself I am going to do a few things; I reccommend that anyone who has had similar experiences with these practices do the same. At least we can get sme amusement for our money.

    1. Write the CEO at his office. He won't give a damn.

    1a. Write the CEO at his house. He still wont give a damn.

    2. File a cmplaint with your state attorney general.

    3. Send a letter to your representative.

    In all of these letters, include data that shows the pattern. Emotions are not the thing that is gogin to change this, information is.

    4. If you have a friend with an account at the same place, compare notes, If they are treating you both differently this could be construed as evidence of inconsistency in their practices. (I am not talking about interest rates, credit limits, etc. I mean the way they deal with billing and payments) This makes it hard for them to defend as normal business.

    Might even be considered discrimination in some quarters.

    4. Sue the bastards in small claims court. I do not know if you can do this but, if possible, it might be a way to get one of these clowns in front of a judge to try and explain themselves.

    4. Tell all your friends to send letters

    If everyone who has had this problem does similar things it will cost them big time.