Although I have never claimed to be an expert when it came to credit cards I must say I always felt that I knew how to stay ahead of the game:  Pay your bill on time; if you are carrying a balance, look for a low rate card; if you pay your balance in full, look for the card that offers the most goodies, etc.  I never expected the wakeup call I got this past week. 

I made a larger than normal purchase in October on my Discover Card in order to buy my wife a 10^th anniversary gift.  (Note to all male significant others out there: shiny yellow metal with all kinds of sparkly things stuck on seems to make female significant others smile)  I had been planning this for two years and the timing of our anniversary date and my getting the access to the money to pay for the gift was off by about two weeks.  Not to worry, I figured that I'd put it on a credit card, deposit the check when it arrived and pay this amount back to the credit card company.

In the mean time, I carry a small balance on the card and I send the same amount in each month. 

Here are the mistakes I made:

My paycheck is direct deposited into my account and we use online bill paying with Citibank.  The last check I actually remember having physically written was when I bought my home 6 and a half years ago, I am unable to recall the last time I deposited a physical check.  When I deposited the check with a teller, I had to stick my card into the reader because I do not even know my account number anymore.  I mean with electronic banking, who needs to know their account number, right?  (Yes I went to a teller because I figured it would speed up the clearing process)  The check was from out of state so it took about a week to clear.  Who knew?  I figured the Citibank computer talks to the other bank computers every day and they send the money in a day or two, right?  I mean come on, I can PayPal someone and they get the money immediately so my bank should be able to do it in a couple of days!

Meanwhile, I never bothered to check online to see what the minimum payment was; I just sent my regular monthly payment to Discover.   This payment is more than the minimum payment and enough to pay the card off later in 2006.

Last week I got an annoying phone call from the Discover people.  It seems that not only did I not make my payment; I also got hit with a $39.00 late fee.  Of course I was sure they had the wrong guy, I’m not a credit criminal so I rather indignantly informed the offending Discover Storm Trooper that he must have been mistaken, for I of course had made my payment on time.

Here comes the good part if you’re Discover and the bad part if you’re me… I was past due $137.00 which was due immediately!

“How could this be?” I inquired. 

“Your payment was $18.00 short and you have been assessed a $39.00 late fee” I was told. 

“Okay I’ll pay the $18.00 later today” I replied. 

“No good,” I was told, “as soon as you short-pay, the entire amount i.e. next month’s payment, the late fee and the amount by which you under paid becomes due immediately.”

“You must be kidding” I exclaimed, “How can next month’s payment be due this month?”

“You have to read the fine print in your agreement” I was told, “it’s in there”.

Lo and behold, the Discover Storm Trooper was right!  How could I have missed that clause all these years!

Truth be told, I don’t believe that I’ve ever read one of those tiny enclosures with even tinier print.  I’ve also never been unfortunate enough to short-pay my credit card before either.  The bottom line is that it is my fault that I paid less than required; I take full responsibility for that.  However I believe that most consumers have not read this fine print and that those who truly cannot afford this type of ‘hidden’ charge are being victimized. 

Credit card companies and anyone who is in the business of extending credit to consumers should be required by law, to spell out in clear English using at least 12 point type, all penalties and what circumstances trigger them.

I was determined to educate the masses on personal finance before this occurred, thanks to Discover Card, I’m now even more determined to reach everyone I can.