Consumers who are a little uneasy about credit card debt might want to pay off their balance immediately following a trip to the mall or grocery store. You don’t even have to leave the store these days – just make a payment using a mobile banking app on your smart-phone.
There are several advantages to paying off your credit card balance this way. For one, you needn’t worry about forgetting to pay your credit card bill at the end of the month, and you can easily add the transaction to your budget and then forget about it.
Related: How a credit inquiry affects your credit score
But a nice feature of most credit cards is that they offer a grace period of 21-to-30 days before interest starts to accrue. By waiting for the grace period you can review all of your purchases at the end of the month and then simply make one lump sum payment to clear off your balance.
When I started using a rewards credit card for all of my spending I used to pay off my balance immediately after making a purchase. Back then my credit card spending was limited to groceries and gas. But as I grew more confident with this approach, I started paying off the balance weekly, then bi-weekly, before finally just waiting until the statement due date before applying a payment.
It worked well for me because I get paid once a month and so it was convenient to review my credit card statements all at the same time and then pay off the balances in full.
As I funnelled more of my everyday spending onto a credit card to earn rewards, I thought it would be overkill to pay off my card balance every time I bought something – what a pain to manage when you have dozens of transactions every month.
What could possibly go wrong if you leave your credit card balance right up until the last minute when your statement comes due? As long as you pay the balance in full every month then the 19 percent credit card interest shouldn’t concern you.
Related: Cash discount, or credit card rewards: Which do you prefer?
So imagine my surprise when I checked my latest MasterCard statement and saw a $25 interest charge from my last credit card bill.
You know how your bank suggests you pay your bills three days before the due date to make sure the payment clears? Well apparently I waited too long to make a payment through my bank online and the bill ended up getting paid two days late. Crap! That meant interest was charged on the full balance.
While this lesson probably won’t change the way I pay my credit card bills in the future, I will be more conscious of the statement due date and set monthly reminders in my calendar.
It’s smart to review your credit card statement at least a week before the due date and then make sure to submit payment several business days in advance. Don’t wait until the due date to pay bills online or there’s a chance it won’t show up as paid until a day or two later.
Related: How I cashed in on credit card rewards this year
On a positive note, I called MasterCard and confessed my stupidity, while reminding them how diligently I’ve paid off my balance in full every other month. They waived the interest charge, so I’m glad I asked.
Do you pay off your credit card balance right away or wait until your statement due date?
As expected, this year brought considerable change to the credit card industry, particularly when it comes to rewards cards and loyalty programs. Here’s what made headlines in 2014:
TD launches Aeroplan credit cards
January 1st marked the beginning of a new partnership with Aeroplan as the loyalty company ended its exclusive agreement with CIBC and formed a new alliance with TD Canada Trust. CIBC sent about 550,000 of its Aerogold cardholders over to TD to complete the new three-way partnership.
TD mishandled the transition, however, as the bank failed to get cards to many of its new customers by the time their CIBC cards expired, and those who got their cards on time failed to receive the accompanying PIN until weeks later.
The highlight for those Aeroplan customers was the new TD Aeroplan Visa Infinite card, which became the go-to card for Aeroplan collectors and frequent Air Canada flyers.
Air Miles expands redemption options
Air Miles promised a faster and better way to redeem reward miles when it introduced Air Miles Cash in 2012. But the lack of sponsors offering in-store redemptions hurt the ability to grow Air Miles Cash and reach its target audience – members who want to receive an instant reward.
That changed this year with the launch of its e-Voucher program, where Air Miles Cash collectors can go online to redeem their miles and get a voucher emailed to them for use at retailers like Safeway, Cineplex, iTunes, and Starbucks.
The program has expanded to include more in-store Air Miles redemptions at Safeway, Sobeys, Rexall, Metro, and Jean Coutu, to name a few.
Costco splits with Amex, partners with MasterCard and Capital One
Costco ended a 15-year marriage with American Express this summer as talks broke down south of the border between the wholesale giant and its long-standing credit card partner.
The writing was on the wall when marketing material for the popular TrueEarnings Card was pulled from stores and the card was closed to new applicants in July.
Two months later, American Express officially confirmed that its cards would no longer be accepted at Costco’s in Canada after December 31st, 2014 and that its co-branded credit card would be scrapped.
Just hours later, Costco and MasterCard announced a new partnership that would see MasterCard become the new exclusive credit card accepted at Costco’s across Canada.
It was also announced that Capital One would step in to offer a co-branded credit card that would replace the TrueEarnings Card – serving as both a credit card and a membership card.
Amex introduces new SimplyCash cards
Reeling after losing an exclusive deal with a major retail partner, American Express jumped into the cash back credit card space with the launch of its new SimplyCash credit cards.
With a bonus offer that cash back fans hadn’t seen since the glory days of the MBNA Smart Cash card, SimplyCash turned heads by giving 5 percent cash back on every purchase for six months, and 1.5 percent back on every purchase thereafter.
The no-fee version gives 1.25 percent back on all your spending, which is good enough to become the top no-fee cash back card on the market.
Visa, MasterCard lower interchange fees
Even after the competition tribunal said last year that retailers did not have the right to impose a surcharge on credit card transactions, small businesses continued to lobby the government for changes to what they consider to be unfair rules and rising costs.
New finance minister Joe Oliver listened and told Visa and MasterCard to “voluntarily” lower their interchange fees – the fees charged to retailers for credit card transactions – or face potential government regulations over the practice.
The credit card companies obliged, agreeing to lower the fees by about 10 percent where it will remain for a minimum of five years.
Final thoughts
The last two years have been interesting for the credit card and loyalty program industry – filled with acquisitions and turmoil as major partnerships ended and new ones began. The upheaval has largely been good for consumers, as banks and credit card issuer’s battle for share of your wallet.
Related: How I earned $1,555 in credit card rewards this year
Who knows what 2015 will bring, but perhaps the big story next year will be the launch of Tangerine’s long-awaited cash back credit card?