Just today I received my Credit Card statement and maybe this have been the first time I misplaced my one check which was supposed to be in the drop box. So only partial payment got through but the finance charge (interest) payable is just unimaginable. No problem will be cleared this month but this made me think HARD!
Ok here are figures, solve this puzzle what rate they applied. Outstanding balance for the month of November was: PKR 46,843 , I have paid PKR 42,000 on due date and check of remaining payment was never dropped (forgot!) so outstanding balance was about PKR 4000 , and today i received this statement with almost PKR 2000 as finance charges. Wow only for one month it is about 50% for the payment. Which mean annually it would be 50*12= 600% for the year!
LOL impossible! I called their call center and they dropped a BOMB on my head and I got to realize how great this credit card banking business is!
He shared with me few things which were completely NEWS to me:
1. When you do not make FULL payment , every cent, it is called partial payment, and it does not matter you may 10% or 90%. Finance charges is calculated to FULL payment, not the outstanding balance! So while i was thinking they will calculate charges on outstanding balance PKR 2000, at the same time the banker was calculating the interest on the full payment of the month.
2. Also interest rate is calculated on each transaction daily, from the date of transaction to the date when the whole balance for that month will be paid. So it gets really worse.
Now after knowing these above two facts I came to realize how many close dear friends of mine got into Credit Card debt hell. It was the smart banker! But i do not blame only the banker, as we should take full responsibility of our acts. As we have signed and agreed T&C with the banker and we are using his money for the full month without any charges(if paid on time.)
If i knew the above facts before the due date, I would have made sure to make the full payment. I thought as we have paid almost 90% of the outstanding , very nominal charges would be due to us. But this is totally different world. I am posting this on my blog to make this the part of the record so you and I can be careful for the next credit card payment.
