4

Here's a screenshot from my credit card's payment form:

alt text

Out of habit, I tend to set the payment date to a day far sooner than the statement's due date ...I suppose for fear that something will wrong with the transfer process on the last day and my payment will be late.

Is this rational? Is it actually in my best interest to not muck with the default date, thereby collecting more interest? What is the credit card company's reason for setting the default payment date as the due date?

4

In your particular example as the transaction date is considered your payment date, it makes sense that they are collecting funds from you at the last possible day, ensuring that you are enjoying full credit period.
Q)Why is it always last day?
- As pointed out not all accounts do this, some do it.

Q)Why do some site do this? What is the credit card company's reason for setting the default payment date as the due date
- If its a card site offering this, then they do not want to get sued by customer for recovering money before their payment due date ... you have all kinds of people out there, so better be safe and put the date as the last day of due date.
- If its some other site, then its a Bad UI practise, but easy to code functionality. Pick up the date which is readily available, rather than X (1-3) days before computation. Plus they cannot hardcode the value of X, it has to come from some where. Then it becomes more fanciful solution, a radio button to choose from pay immediate or pay by date etc ...

Q)I tend to set the payment date to a day far sooner than the statement's due date. Is it rational? - Yes it is rational and you should make the payment couple of days in advance as there could be chances says once in 25 times you make a payment that there is a bank or other technical error and you have time to rectify it. Else you would be charged a late fee plus interest.
- I know some one may say if it happens you can always call up the card company and request them to reverse these as it was one off case and not due to you.
- If you look at it other way, if you pay couple of days early, you dont loose anything at all. Assume you pay from your checking account, if you are paying from saving, a 2 days interest is not that big a deal.

Q)Is it actually in my best interest to not muck with the default date, thereby collecting more interest? - As above it is actually in your interest to muck with the default date, unless your bank account and the card provider are same.

  • Your second question is how Amex does it. There's a radio button 'Pay now' (the default), and 'Pay later' with a dropdown of when to pay. – Falmarri Dec 23 '10 at 19:12
5

Not all credit cards do this.

There are probably two reasons for taking this approach:

  1. If you are accruing interest, the bank makes more money if you pay as late as possible. (Credit card interest is calculated using average daily balance)
  2. Customers may prefer it.
4

There is a comment right there "The transaction date will be the day that you made the payment". so they will make sure it's credited before the account is overdue.

2

The CheckFree electronic billing/payment system has this behavior. (Your account is serviced by CheckFree. I recognize the form design in your screenshot.)

I have multiple accounts that use CheckFree for online payment (credit card, electric bill). They all do this.

All of my other (non-CheckFree) accounts default to a much closer date, so I would not call CheckFree's behavior "normal".

Personally, I always change the payment date to to something that is at least a few days before the due date. The reasoning is that if something goes wrong with the payment (e.g. bank error), I have a chance to correct it before the due date.

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