The Statement Cycle Trap


Just when you think you know all of the tricks and traps the credit card companies can come up with, The Consumerist has been getting some tips on a new one from Chase.

The Monthly Cycle Trap

In the wake of all of the humor surrounding the new iPad, I am going to delve no further in that direction.   That said, it seems that Chase has set up a nice little trap surrounding their statement cycles, both for credit cards and mortgages statements.     The idea is that if you make a payment before your statement closing date, they count it towards your previous month, not your current statement.     Let’s say your statement closes on the 15th and your payment is due on the 8th of the next month.     If you make a payment before the 15th, they payment is credited towards the previous statement, not the next one.     This is a problem, I suppose if you try to pay a statement very early, and it doesn’t count towards that statement.     Essentially, you have about three weeks between when your statement closes, and when your payment is due.    If you pay early, it is as if you didn’t pay at all for that statement.    Of course we all know the consequences if you pay late.

Playing Devil’s Advocate

Why would you want to pay early anyways?   I suppose if you carry a balance, you might save a little interest, but in the example in The Consumerist, the cardholder makes a payment on the day after his due date.   I don’t get it.    From the bank’s standpoint, how can they know which statement you intend your payment to apply to?    It would seem that making the decision, based on the date the payment is received is the only way they could do that.

On The Other Hand…

First, there is no reason you should not be paying all of your bills electronically in this day and age. When you pay electronically, it is easy to make every payment precisely on it’s due date, so you keep your money up until the moment it’s due.     Secondly, the run around that Chase puts the cardholder through is inexcusable.     The correct response would be to credit the later statement for the early payment, and courteously explain how payments are applied to each statement.     They should also explain the matter more clearly on the bill.    All they need to do is put a reminder, next to the due date, that any payments received before a certain date are credited to the previous statement, unless you specifically indicate otherwise.

In Conclusion

You should always be aware of your statement closing date, even if it is somewhat hidden on your statement.      It is an important date for both charges and payments.    As a “deadbeat” who always pays in full and never pays credit card interest, you better believe that I will hold off on large purchases until the day after my closing date, in order to give me an additional 30 days of free financing.    It turns out that the closing date is also very important to know, if for some reason you find yourself needing to pay your bills early.

You’ve been warned.

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