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Most consumers now rely on credit cards to pay for purchases.
So you can imagine reader Karen’s horror when she tried to use her credit card for this purpose and it was rejected. When she called the card issuer, she learned that her payment was eight days late, even though she had paid her entire balance.
She says she made the payment online, directly from her checking account. The payment left her current account on the same day, and the issuer even received the funds. Karen wonders if such a hold is legal for the card issuer.
Read all the answers from our credit card experts.
Ask Punculali a question.
When is the payment due?
A federal law known as the Truth in Lending Act (TILA) governs the details of when card issuers must credit payments you make. The Credit Card Act of 2009 also contributed to the improvement of TILA by establishing certain protections for cardholders. Before the Card Law went into effect, issuers had more leeway in handing out interest rate changes and fees to unsuspecting consumers.
TILA’s various defenses include specific procedures for when your card issuer must credit your payment. And Karen, it’s not illegal for the issuer to hold that you mention.
According to TILA, the issuer must credit your payment to your account on the day your funds are received. However, if it does not charge any financial or other deductions from your account as a result of a delay in crediting funds, it may block and delay the crediting of funds to your account.
The rules also state that the deadline for making payments must be 5:00 pm or later at the place where the payment is to be made on the day the payment is to be made.
For the few who continue to go to the physical bank building to make a payment, closing time is when the bank closes for business. However, if the bank closes before 5:00 pm, the actual closing time will be the payment deadline.
In the event that the card issuer does not confirm your timely payment and charges a funding fee, they must refund this fee to you in the next billing cycle.
Card issuer practice
Delays are not illegal, but why would your card issuer delay your payment?
In the vast majority of cases, issuers appear to release funds within 24-48 hours of a customer making a payment. In rare cases, this may take longer depending on the specifics of the situation. If you have any problems, you should contact the issuer directly. You must also take steps to ensure that your payments are processed on time, such as by mailing checks five business days in advance.
In particular, payments may be suspended for various reasons, such as any suspicion of fraud and concerns about the possibility of receiving funds or having sufficient funds in the client’s account to cover the payment.
Large payments, which can occur if you pay off your entire balance, as Karen did, can also trigger scrutiny by the creditor.
Real-time payments can offer even more ease
As a general rule, you want your funds to be credited faster so that your line of credit is available for use sooner. And real-time payments are ready to make it even more real. Fast payments are available through Visa and Mastercard, as well as apps such as Zelle, but actual payment processing times may vary.
The Federal Reserve is currently working on a real-time payment system that will enable instant payments throughout the country. It is expected to be launched by 2023. And currently there is at least one private system that provides instant payments – the Clearing House Real Time Payments (RTP) system, which is owned by a group of large banks.
As these innovations gain momentum, in the future you will be able to see your payments instantly so you can continue shopping and using your credit cards without a second’s delay.
bottom line
Karen, the bank can withhold your credit card payment if it has any doubts. However, he cannot accrue financial expenses due to a delay in crediting the payment. The Lending Truth Act sets out the procedures for how card issuers must credit your payments.
Contact me at pthangavelu@redventures.com if you have any credit card related questions.
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