Clarification on Payment Due Date for Credit Cards

Just a few days back I read an article in the Times of India pertaining to the confusion on Credit Cards Payment Due Dates. Having worked in the Credit Card industry, I thought it would help if we threw some light on the subject.

All Credit Card Issuing banks have 2 payment dates.
(1) Print Due Date: This is the Payment Due Date which is communicated on the customer statement. This is the date communicated to the customers, by which the payment needs to be made
(2) Actual Due Date: This is usually between 2 to 5 days after the Print Due Date. This includes 2 to 5 days of grace period which the bank gives for the cheques which have been dropped on the Payment Due Date to Clear and for the clear funds to reach the credit card issuing bank

In most cases customers drop cheques on the Payment Due Date as communicated on the statement. If the cheque is dropped in the drop box as communicated by the bank on the payment due date, it gets picked up the next day and sent for clearing. The payment gets credited to the Credit Card only after 2 or 3 working days depending on the clearing period and if it is an outstation cheque or not.

If the Banks start levying the fat late payment fee of Rs.500+ if the payment does not reach them by Print Due Date, 80% of the customers would get charged and the call centre would get calls that we have dropped the cheques on time – how dare you charge us etc. This is the reason why the due date configured on the bank statement is different.

However, if you use Internet Banking, NEFT to make Credit Card Payments, they reflect instantaneously as they do not need to go through the cheque clearing process and hence the customer will not get charged even if he makes a payment a bit late after the print due date and before the actual due date.

Late Payment Charges are a major source of revenue for credit card issuers, and this revenue line is monitored at the highest level. There is a monthly target for Late Payment Fees and strict guidelines for Late Payment Fee Reversals as well. Most banks will reverse out the Late Payment Fees the first time … however will be very strict after that. However if you spend more than Rs.20000 on your Credit Card every month and have been paying back regularly, then your bank will not want to lose you as their customer and you can get them to reverse the fee sighting some reason or the other.

However, I suggest that you make your Credit Card Payment in time, however if you have forgotten, the first time you will be excused, but after that you jolly well start paying the fees. You need to be responsible – if you take your bank for a ride, be rest assured, they will take you on a ride as well.

For comments, suggestions and queries, you can write in to Ask.Pranav@Gmail.Com and I will write back to you as soon as possible.