I really didn’t think lending practices could sink any lower. We’ve had First Premiere charging 79% on credit cards, universal default (your other credit cards raising interest rates if you pay late on someone else), transaction sorting and outrageous overdraft fees.

I just read two posts on the consumerist about readers who wrote in complaining about late fees charged due to making payments early. The rational behind this craziness? It’s all about the pay cycle – which most consumers don’t consider.

Apparently late fees occurs they might miss a payment within a payment cycle, even though the customer makes payments before the due dates on their statements. Pay cycles are typically less than a month, coinciding with the grace period. If you don’t pay within the cycle, you incur late pay fee. It took me a little while to figure out the timing so I thought I’d try and break it down for you as simply as possible.

Here’s how it works:

First Pay Cycle

• You receive credit card statement #1 on September 1, with a due date of September 20th.
• You make a payment on September 10th, before the due date, and within the payment cycle. All is well.

Second Pay Cycle

• You receive credit card statement #2 on September 21. The due date is October 15th.
• You make a payment on September 18th, before the due date on October 15, but this is still within the first payment cycle (which starts on Sept 21).

Third Pay Cycle

• You receive credit card statement #3 on October 16, with a payment due date of November 8th.
• You make a payment on October 18th, before the due date on November 8th, but within the third payment cycle.
• The second payment cycle was between September 21 and October 15th. No payment was received during cycle two and the system marks you down as missing a payment.

It doesn’t matter that you made three separate payments, all before the due dates on three successive statements. You’re late for payment cycle two, and you’re not talking Chase out of the $39 late fee.

Apparently, this same practice is taking place with Chase mortgage payments:

When I called to find out why I was being charged a $52 late fee for an account that is never late (it’s electronic), I was told it’s because I pay too early, and I need to send in my payment after the 1st of the month instead of on the 30th of the previous month (I pay on the 30th because I don’t trust Chase and I want time for the payment to clear). There is nothing on my statement about this – only a warning about paying after the 15th of the month.

Wow.

If this is happening to you, please don’t take it lying down! Here are things you can do:

1. Call your state attorney general
2. Write the Federal Trade Commission,
3. Report Chase to the Comptroller of the Currency at 202-874-4700.
4. Complain to your House and Senate representatives.
5. Write to us and tell us your story: blog (at) creditinfocenter (dot) com. We’ll make it public.

Have any other horror stories to relate. Tell us about it!

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