Follow Up On CARD Act And Due Dates

Does it surprise you to know that even someone who writes extensively for AskMrCreditCard still learns something new every now and then?

A few weeks ago, I wrote what I thought was a very definitive article on how the CARD Act pertains to credit card due dates on weekends and holidays. The idea was pretty simple.   The CARD Act says that due dates must be on the same day every month.   It also says that if that day is one in which mail is not accepted, such as a weekend or a holiday, that a payment received the next day should not be counted late.

My Experiment

With the actual text of the CARD Act in hand, I proceeded to pay my Amex balance electronically, setting a due date of November 12th.  My statement listed a due date of November 11th, but that was Veterans Day, a Federal Holiday during which no mail was delivered.   My reading of the CARD Act told me that Amex would not credit my payment on the 12th as being late.

The Results

Amex did in fact credit my payment as late, and assessed interest.    I called their customer service and, while they were happy to waive the interest, informed me that that law only applies to payments by mail, not electronic payments.   That explanation did not make much sense to me, as the text of the law doesn’t specify the method of payment, it just says that:

If the payment due date for a credit card account under an open end consumer credit plan is a day on which the creditor does not receive or accept payments by mail (including weekends and holidays), the creditor may not treat a payment received on the next business day as late for any purpose.’’

I even asked for a supervisor, just to be sure, and I got the same story; that law only counts for mailed payments, not electronic ones.

What Does The Government Say

I went to the web site HelpWithMyBank.gov where I found the following question in their FAQ:

My payment is due on the 4th of the month, however this month the 4th is a federal holiday. I generally mail my payments to the bank. Why don’t they change the due date on the bill?

The answer stunned me:

Effective February 22, 2010, the law will require that

* The due date must be the same day each month. The due date could be set as the last day of the month or it could be a specific date in the month, such as the 4th.
* The payment cut-off time generally cannot be earlier than 5 p.m. on the due date.
* If the payment due date falls on a weekend or a holiday when the bank does not accept or receive mailed payments, then any mailed payment received by the bank before the cut off time on the next business day would be considered an on-time payment.

Since you mail your payments, you would have until the cut-off time on the next business day to make your timely payment. However, if the bank accepts or receives payments on the due date by a method other than mail, such as electronic or telephone payments, and you make a payment using that other method, you would still need to make the payment by the due date.

If you followed the payment requirements and you were still charged a late payment fee, you can dispute the charge with the bank. Notify your bank in writing using the billing error notice instructions, which should be on the back of the periodic credit card statement. Be sure to use the address specified after “Send Billing Inquiries to:” on the back of the statement. This is usually not the same address where you send your payment.

Amex Was Right

My gut still tells me that the text of the law doesn’t distinguish between mail and electronic payments, but it seems as if the interpretation by the regulators does.  I did hear something from the Amex supervisor that they since receive electronic payments 365 days a year (never mind that most banks won’t issue electronic payments on weekends or holidays), the law does not apply to them.   They even went so far as to claim that the law does apply to Visa and Mastercard, but I am pretty sure they also accept payments electronically.

The moral of the story is that when my due date falls on a weekend or a holiday, I should go back to paying my credit cards electronically on the last business day before they are due.   There was no harm done as the interest fees were waived, and I guess we all learned something about how a seemingly clear law can be interpreted to a bank’s maximum benefit.