In more than 20 years of paying bills, I’ve never forgotten a credit card payment. The worst was when I put a car payment on my credit card when I was young and between jobs. However, recently I mistakenly paid a credit card bill. We have two cards with Citi, and I had paid off one of the cards early to keep my credit utilization low (we had spent a ton of money on college supplies). So when I paid bills, I paid the $15.99 credit card bill to the wrong account. Same company – Citi got their money – just to the wrong account.
The one thing the credit company did right
Fortunately, Citi contacted my wife – it is her account – with daily notices that they hadn’t received payment. At first we both disregarded the notifications, but after two or three I checked and yes, the payment was missing. Yet it showed in my check register.
Call the company
We immediately called Citi, and after spending hours (not to mention being disconnected several times), they were able to look at both accounts and clearly see that the $15.99 was simply paid to the wrong account. We asked that the late fee be waived and also if the payment be moved to the correct account. They removed the late fees. But moving the payment from one account to another was like asking for the moon, even though I believed it would have entailed simply a few key clicks. One person said yes, the next said no…finally a supervisor said that they couldn’t do that.
Make the payment
Since it apparently wasn’t in their system to move the payment – even though we’ve had this card for more than 20 years and had never been late before – we immediately paid the full amount (including fees). I didn’t want to take any chance that they would add some other fee or have another charge appear. I wasn’t feeling too confident about their level of service.
Ask when they report late payments to the credit bureau
Late fees are a pain, but taking a hit to your credit score can hurt even more. Since we’ve been considering downsizing into a new home, I didn’t want a late payment to suddenly appear on our credit reports. I did some research to see if we had any options to keep this from happening. Depending on the website you visit, you will find very ambiguous information.
Some discussion-based websites (as well as Experian) mentioned that you have 30 days from when they reported your last payment to make a full payment; if you do so in that time, they report a paid-in-full balance (as $0 outstanding) and there’s no ding to your credit report. However, others said this varies per company.
We mentioned what we’d discovered and asked Citi if their company was one that reported credit balances in this manner. They refused to give us an answer. All they said was we report to the credit bureaus. In short, their customer service was anything but helpful.
Watch your credit report
Since we received no answer from the credit card company, we were left hoping the informational websites were correct and watched my wife’s credit report. I downloaded her three reports soon after the missed payment and discovered there was a date shown when Citi reports the payment. So we surmised that if we checked again after that date one month later and there was no red mark for a missed payment we were fine. We checked, saw that they reported zero balance, and there was no hit to the credit score.
If you miss the 30-day window
If you don’t receive automatic notifications from your credit card or otherwise didn’t make the payment for more than 30 days, it’s likely that your credit score will be impacted. Interestingly some of the boards I read said that the higher your score, the larger the drop. In fact, a payment that’s 30 days late could impact your score by 100 points. We both have exceptional credit scores, but a 100-point drop for anyone could be a headache.
The missed payment will remain on your credit report for up to seven years, but its impact will diminish over time. Make the full payment as soon as you can and continue managing your credit wisely to start rebuilding your score.
Consider a minimum automated payment
Several people on the discussion board said that they have an automatic payment set up for each credit card to pay the minimum on its due date. I assume they simply change that payment to reflect the actual amount due once they receive the bill or make a second payment that – when added to the automatic payment – pays the bill in full. If you have missed a payment and are concerned with missing another, this could be of help. Additionally, if you are helping others make payments (possibly an elderly parent) having this backstop could put your mind at ease.
You could also set up your credit card bills for full automatic payment every month. If you keep a relatively healthy balance in your checking account, this may be the way to go. Just make sure you have enough to cover the bill so you won’t incur insufficient fund fees.
Truly ridiculous
I don’t normally climb atop my soapbox when I’m discussing financial topics, but it’s truly ridiculous that one missed payment in 20+ years can drop your credit rating by 15% or more. Many people spend a lifetime building their credit and then a one-time event can derail everything. I would love to see this system change to simply remove these kinds of mistakes automatically if you have a history of perfect credit. Yes, three months of not paying your bills should have a consequence. Paying the wrong account where the same company receives the money should be excused.
Photo by Kelly Sikkema