What the heck do you think this statement from a credit card company mean?

[Skidmore]

OK, my husband needed to have his truck repaired and charged it to his Sears MC. When we need to use a credit card for emergencies such as this, I generally pay a large bill in two payments, if possible.

Well, this weekend we got this little pronouncement by way of an "Information update" in the mail.

Please note: You may no longer make minimum payments in advance. YOu must pay the Total Minimum Due each billing cycle. We will no longer apply any portion of payments made in current billing cycles to Total Minimum Due in future billing cycles.


I've re-read this statment over several times and am still unsure of what they are saying. Either you cannot make multiple payments at one time any more so they can ensure themselves of collecting the maximum amount of interest possible, or I don't have the foggiest idea what else they could possibly mean.

Anyone else receive something like this from a credit company?

[TrogL]

1. You cannot apply payments within the current billing cycle to the next cycle's minimum payment

It's considered another payment within the current month.

[peacetalksforall]

2. I think it means pay it all off or pay their interest monthly. Probably there is some tiny

print somewhere that say no overpayments. We know the reason - don't want to adjust interest income down.

A condition of being bought out? Let us know.

[Donnachaidh]

3. It seems like they are trying to frighten people who are sending in early partial payments

When jobs are lost and you cannot make one BIG payment, many folks budget themselves, and hope the company will see that they are making payments, even if it's a couple of partials.

It's a scare tactic, being used against folks who are struggling to make those minimum payments. The company doesn't want to have to process *more* payments, so they send this boilerplate BS out.

[Marrah_G]

4. I believe this is what they are saying:

Example: Your MINIMUM payment is 50.00.

You must pay one payment of 50.00 per month (or more).

You can no longer make a payment of 25.00 every two weeks.
______________________________________

I assume this is to cut down on costs.

[WeDidIt]

5. It's pretty simple

If you are paying more than the minimum payment this month thennext month you must still make the minimum payment. No part of your overpayment this month can be applied to next month's minimum payment.

Since your plan is to pay half this month and the rest next month, you should be fine and this notice does not affect you unless you find you cannot make all of what you plan next month. In that case, you must still make the minimum payment next month.

[robinlynne]

7. Exactly. It only says what it says. If your minimum is 50.00 and you pay 100 in january,

you still need to make a payment of 50 in February. As the poster above said, it does NOT apply to you. All it says is You must make a payment every month.

On my car insurance, if I have extra money I send in extra that month. The next month I will not have to pay anything. This is not true for this credit card (or any credit card for that matter.)

[sandnsea]

6. If you make a big payment in July

You can't turn around in Aug and ask for some of that to be applied to the August bill. The minimum is due every month, regardless of any extra payments made in previous months.

[melm00se]

8. sears, for the longest time,

would take overpayments and apply them towards future payments unless you specifically instructed them otherwise. There was a spot on their payment coupon where you could indicate X for minimum payment and Y for principle payment and if you failed to do so, they rolled it over to the next months payment. (I caught onto this when, as a youngster, I got into credit card trouble, including a Sears account, and my mother, the CPA, caught onto this skulduggery and warned me about it)

I always thought this was questionable on their part (it ensured maximum interest earned for Sears), especially after I got into the credit/collections business and without googling it I can speculate that someone either filed suit or threatened to do so and Sears backed down and amended their policies.

[bullimiami]

14. also, if you sent a large payment in they would make next months minimum 0.

[Warpy]

9. It means the minimum is due every month

even if you make a bigger payment. It means that the overage on a bigger payment will be applied to the principal and knock the total down but won't apply to the next month's payment.

You've understood it correctly. You can't make multiple payments at one time. However, by applying everything over to the minimum and knocking down the debt, they're making less interest, not more.

It sounds like they suddenly want you to pay that puppy off instead of being in thrall for the rest of your life.

[ThomWV]

10. I think it works like this

Let us say your current minimum is $50 per month. In the past if you paid over $100 this month there would be no minimum payment due the following month. However with the change after you pay this months bill, no matter how much you might overpay it by, you will still be faced with a $50 minimum next month.

Not so bad, mild actually compared to some of the shit they pull. It won't effect you at all if you always make the minimum shown on the monthly bill, but you will no longer be able to pay a lot this month (but less than payoff) and avoid paying at all next month.

[Lemonwurst]

11. Should be nothing to worry about

I'm no credit expert, but this notification doesn't seem that odd - and I don't believe it has anything to do with your recent usage of the Sears MC (I have one myself, and have been generally happy with it).

I believe the issuing financial institution (Citicorp, I think) is just ensuring a steady cash flow by dropping a policy of allowing those amounts paid in a billing cycle that exceed the Minimum Payment Due to accrue toward future months' Minimum Payment Due amounts.

Your mention of paying a large bill (such as your truck repair) in two payments suggests that you'd pay about 1/2 during one billing cycle, and the other half in the next. Assuming that repair was a few hundred bucks, it seems you will paying more than the Minimum Payment Due for both periods, so this policy change would not affect you.

Ironically, this CC-issuer would generate the highest interest possible with their prior policy, by previously allowing one or more "No Payment" billing cycles in which the sum of the outstanding balance plus accrued interest (finance charge) would be subject to new finance charges. At least with a monthly non-zero Minimum Payment Due, you the borrower will have to pay down some portion of your outstanding balance, thereby reducing the next month's finance charge to a certain degree.

Two things to note about credit card companies in general (that they don't tell you):
1. You can pay them any amount at any time, and they will credit you. You don't have to wait for a bill.
2. Also, as of the day they post your payment, the finance charge / interest starts being calculated against a lower average daily balance.

A few times I've made mid-period payments on my Sears MC because I keep a low Credit Limit on that card, and find that I want to use it more some months without increasing my Credit Limit. Sure enough, my interim payment is applied, just as if I were billed. This new policy just means that you'll get no more bills where the Minimum Payment Due is $0.00.

[damntexdem]

12. If you pay more than the minimum in one cycle, that does not count for the next.

For example, if you min is $100 and you pay $150, you still have to pay $100 in the next cycle, instead of having the min reduced to $50.

In general, however, ALL letters from your credit card company mean this: "We're going to screw you."

[L0oniX]

13. Simple. CC co's have a billing cycle which is usually 10 to 15 days before the due date.

You can not make an advance payment on something that is not yet due.

[TexasObserver]

15. They want people to miss the billing deadlines, so they can hit you will fees.

The more checks they make people write, the more months they make you write them, the more likely they are to pop you for a late fee. They don't want anyone paying ahead of the next billing cycle. They want to apply all payments to this month's billing, and still be able to hold you delinquent in the future if you're a day late on any monthly payment.

Credit card companies are looking for ways to make more money on fees, and that means assuring everyone has to get their checks out every month, or get hit with a fee. It matters not that you paid 10 times the minimum one month. Late a day the next month and they hit you with a fee.

Your approach is sound. Pay the bastards off fast.