Basic Question re Refund on Credit Card

Silly question...

My credit card bill for January is, say, €2,000.

I clear it every month to avoid paying interest.

Since the statement date, I’ve received a refund of €100, which brought the balance to €1,900, and, subsequent to that, I used my card to cover some work-related expenses of around €500 (which I’ll claim back down the line).

So the balance is now €2,400.

In order to avoid paying interest, should my payment today be a) €1,900, or b) €2,000?

I would have thought €1,900?

Many thanks,

Gordon

Gordon Gekko said:

Silly question...

Click to expand...

Gordon, it's not a silly question at all. I've worked on many processes and systems across banking, and credit cards are still a dark art to me!

If the refund had been processed before the statement was generated, it would have reduced the amount due. But because it happened after, then the full amount is due. The question then is whether or not the bank treats a refund as a 'payment'. The default answer is no, so the full statement balance is still due.

If it were me, I'd pay the full statement balance, and it'll all net out before the next statement.

If it's a bigger amount than you've suggested, I'd call the credit card provider and get a specific answer.

@Gordon Gekko
If it helps, here are AIBs T&C's in the matter:

"Refunds are not treated as payments made to the Account and therefore
will not be reflected in the current amount due for settlement as required under
Condition 36. The amount due must be settled in the normal manner and any
refund received will be recognised and taken into account in the following
Statement."

Edit for completeness:
Bank of Ireland terms have the same meaning as AIB.
KBC and Ulster Bank T&Cs are silent on it.
AvantCard won't treat as a payment, unless the refund is enough to clear the entire balance outstanding.

Gordon Gekko said:

Silly question...

My credit card bill for January is, say, €2,000.

I clear it every month to avoid paying interest.

Since the statement date, I’ve received a refund of €100, which brought the balance to €1,900, and, subsequent to that, I used my card to cover some work-related expenses of around €500 (which I’ll claim back down the line).

So the balance is now €2,400.

In order to avoid paying interest, should my payment today be a) €1,900, or b) €2,000?

I would have thought €1,900?

Many thanks,

Gordon

Click to expand...

The simple answer is that amount due is whatever is on the statement - any activity after the statement date will roll into the next one. Trying to calculate the amount due from the on-line balance is difficult unless you're fine with occasional early-paying

Pay the full balance and the following month you will be in credit too the value of the refund.
Bank of Ireland's cut of point is the 14th of each month and bills processed on the 18th of each month

Pinoy adventure said:

Bank of Ireland's cut of point is the 14th of each month

Click to expand...

Every customer has their own billing cycle.

Gordon Gekko said:

I would have thought €1,900?

Click to expand...

Me too. I would expect that a refund after the statement is issued should reduce the amount required to clear the statement balance. That said, as i don't want to be bitten, I always pay the amount as printed on the statement regardless of any refund in the interim.

If your balance was 0 and you bought say, a washing machine for 600 . . then your CC bill lands saying 600 . . then before the payment due date the order is cancelled and refunded, can you really then be expected to pay 600 into your CC to avoid interest?

Oh dear. I don't read statements. I just go online on the 15th for bill due on 18th and whatever the balance is on that date I pay. It appears that if I get a refund in between the bill date (usually 2nd of the month) I could actually get caught for some interest. Well worth noting given we are in a world of refunds at the moment. Thanks for the heads up.

Thanks All.

I’ll pay the higher amount just to be safe.

It all stems from hiding a Christmas present, normally I don’t use it other than for expenses.

michaelm said:

If your balance was 0 and you bought say, a washing machine for 600 . . then your CC bill lands saying 600 . . then before the payment due date the order is cancelled and refunded, can you really then be expected to pay 600 into your CC to avoid interest?

Click to expand...

In practice, where the refund completely clears the balance, I think some of the banks would treat this the same way as the Avant terms - the total balance going to zero should trigger a 'netting' of all the sub balances within the account. But from what I've seen their T&C's are silent on it, so I'd be careful with it.

Credit cards are the banking product I struggle most with because I've had limited experience with them through work.

Pinoy adventure said:

Pay the full balance and the following month you will be in credit too the value of the refund.
Bank of Ireland's cut of point is the 14th of each month and bills processed on the 18th of each month

Click to expand...

My avant card is the 14th as well, so I just pay what is owed as at that date, even if there is more owing. Never being charged interest. It isn't a rolling 30 days!