Was having a lunchtime chat with a buddy about paying a store credit card balance. Here is the scenario he was presenting:
March Statement Balance = $2,000
Returned Items During April Cycle = $500
His position was that the returns are treated the same as a partial payment and that the total of all credits needed to equal the statement balance (to avoid interest charges). So in this case, he only needed to pay $1,500 to satisfy the statement balance of $2,000. I’ve never really thought about it this way, but is he correct? Does the answer change depending on whether its a store card vs traditional credit card?
It all depends on when the return credit is processed. If the March bill is $2,000 and the return is processed before the April statement date, then he is correct. Better get the dates straight or else be charged finance charges for at least a month. I suspect all processors handle it that way.
Yeah, if the balance is $2,000, that likely means the returns were processed after the statement date, and he’ll have interest to pay if he doesn’t pay $2,000.
I should have added that I am pretty sure a return would not meet one’s obligation to make a minimum payment. It would reduce the overall balance, but a minimum payment would still be required.
My experience has been the opposite. Even if the returns were processed after the statement closing date, as long as the credit has been posted before the payment due date it should count against that statement’s balance. In other words the $500 should count against the overall $2000 and the credit card holder would only owe $1500 and would not accrue any interest. At least that is how it worked with me for a few cases like that.
It will be interesting to see what Butler reports.
Edit: This entire discussion is based on the assumption that the credit card holder pays the balance in full each month. If not, everything I said is out the window. However, I am guessing that is the case with Butler’s friend.
I recall my brother doing this years ago. He claimed if he bought and returned an item it would count as his minimum payment. Its been a long time so i dont recall the exact specifications.
Im my 23 years of having credit cards, there has only been one month that i didnt pay my full statement balance. I used my credit card to buy a motorcycle and needed 2 months to pay it off.