Charged interest on outstanding amount as i paid credit card bill 2 days post due date

[raulcasey]

My Amex Credit card due date is 11th July. I have made the minimum payment due on 10th July and then cleared the rest of the outstanding amount on the 13th July thinking that i can avoid the high interest that is charged on the outstanding balance. But once the statement is generated i see that i was charged Interest fees on the outstanding amount. I contacted Amex customer support and they are telling me that the 3 days grace period post due date is applicable only on late fee charges and that interest will be charged even if the payment is delayed by 1 day.
I told them about the new RBI guidelines but the support executive is quoting their T&C and stating that its not applicable.
Can you guys shed some light on this. Is the 3 day grace period for Credit card bill payment only applicable on late payment fees? Is is true that banks can still charge us Interest on the outstanding amount even though its cleared within the 3 days period?

Thanks

 

[supperman]

There are other posts, where something similar has happened with others.

While the consensus is that you should not get charged, if the credit and settlement take place within 3 days of the due date, there are some nuances.

The RBI circular says, "Card-issuers shall report a credit card account as 'past due' to credit information companies (CICs) or levy penal charges, viz. late payment charges and other related charges, if any, only when a credit card account remains 'past due' for more than three days.".

According to this, if you paid the outstanding amount within the 3 day grace period, then you wouldn't be charged any penalties, or have your account reported to credit bureaus. However, interest payment on outstanding may not be described as a "charge" or a penalty. The RBI circular only talks specifically about charges and penalties, so it's dicey. Unless of course, there has been a clarification with a legal weight where late payment interest has specifically been classified as a penalty or charge. Perhaps there has been.

In most cases, however, as I mentioned before, most banks do not charge a penalty or levy an interest, if full payment reflects with the appropriate dates within 3 days of the due date.

Depending on your relationship with Amex, you can request them to remove the interest charged. If that doesn't happen, you can try and reach out to higher authorities and ultimately to the RBI Nodal officer. I suspect you'll get your resolution before that with Amex. They can let it go, depending on your relationship. As you've already tried with customer care once, just contact them again, hopefully a different agent will be more helpful. If that doesn't work, higher level Email support and so on.

 

[desiviru]

For me the 3 days grace is only for settlement of payment not due payment. Whatever dues you pay till due date has 3 days grace and if you pay in grace you won't be reported to Credit Bureau but you can't escape interest which is charged on leftover amount for complete period. I mostly clear my dues which are even on auto-pay 2-3 days before due date always. Currently have active auto-pay on all CCs and keep fund transfer from main account on schedule if by any chance I forget last date it reaches that account one day before due date. So covered by all sides.

 

[guest_123]

You will be charged interest for any outstanding amt post due date from the day the outstanding amt txn happened but most banks don't apply it as long as everything is cleared within 3 days past due date. @supperman is correct in his analysis as interest charged on outstanding amt is not "penalty" but rather a revocation of the privilege of interest free credit provided by a credit card on the premise that full amt will be paid on or before due date.

 

[card_007]

Found this in HDFC MITC "Grace days of 3 days is allowed from the payment due date oncredit card accounts, where payments are not overdue. Thepayment due date as mentioned on the credit card statement isthe date by which clear funds must be credited to the credit card,however 3 grace days are provided to accommodate forprocessing time of payments. The Bank shall report a credit cardaccount as 'past due' to credit information companies (CICs) andlevy late payment charge, when a credit card account remains'past due' for more than three days. The number of 'days pastdue' and late payment charges shall, however, be computed fromthe payment due date mentioned in the credit card statement."

 

[desiviru]

Found this in HDFC MITC "Grace days of 3 days is allowed from the payment due date oncredit card accounts, where payments are not overdue. Thepayment due date as mentioned on the credit card statement isthe date by which clear funds must be credited to the credit card,however 3 grace days are provided to accommodate forprocessing time of payments. The Bank shall report a credit cardaccount as 'past due' to credit information companies (CICs) andlevy late payment charge, when a credit card account remains'past due' for more than three days. The number of 'days pastdue' and late payment charges shall, however, be computed fromthe payment due date mentioned in the credit card statement."

HDFC is clear with TnC. They say, 3 grace days are only for payment processing and not payment itself. If your due date is 10 and you made payment on 13 then HDFC take it as late payment. The payment date should never be above 10. Sometimes we pay on a date and it reflects after 3 days like with billdesk direct pay. So banks actually see payment date and act accordingly.

RBI rules say you should allow atleast 3 days for CC holders to make payment but many banks aren't following this. BBPS settles within seconds but there also if payment date is next day after actual due date, be ready for finance charges in next staement on the amount due. That's why I clear everything 3-5 days before due date. Even I know BBPS will settle instantly but who take risk of last day when even BBPS can go down.

 

[card_007]

HDFC is clear with TnC. They say, 3 grace days are only for payment processing and not payment itself. If your due date is 10 and you made payment on 13 then HDFC take it as late payment. The payment date should never be above 10. Sometimes we pay on a date and it reflects after 3 days like with billdesk direct pay. So banks actually see payment date and act accordingly.

RBI rules say you should allow atleast 3 days for CC holders to make payment but many banks aren't following this. BBPS settles within seconds but there also if payment date is next day after actual due date, be ready for finance charges in next staement on the amount due. That's why I clear everything 3-5 days before due date. Even I know BBPS will settle instantly but who take risk of last day when even BBPS can go down.

In the past ICICI cc told me that 2 days grace period is there for making the payment. So if payment is received within 2 days, then there are no charges. I have only encountered SBI which levied charges for payment made a day later which also they reversed. I don't use this to delay payments but have missed some by a day or two without any charges from any private banks. The downside of keeping so many credit cards

 

[desiviru]

In the past ICICI cc told me that 2 days grace period is there for making the payment. So if payment is received within 2 days, then there are no charges. I have only encountered SBI which levied charges for payment made a day later which also they reversed. I don't use this to delay payments but have missed some by a day or two without any charges from any private banks. The downside of keeping so many credit cards

I didn't say you deliberately miss payments. But many a times, you will be at receiving end and will have to go through hassles of complaining at RBI which is time consuming. So better never give bank a reason to charge you unnecessarily.