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Why do I pay less than my credit card statement balance?
May 19, 2018
6:19 am
Bill
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I have a CIBC Dividend VISA Infinite credit card and have the full balance automatically paid out of my linked bank account every month, done for years now. Often, maybe about half the time, the amount that comes out is a bit less than my statement balance for the month. (And it's not the cash back, that gets paid out once a year.) Why?

I'm not complaining, I even hesitate to bring it up because maybe I've got a good thing going, but it's always less, and usually it's about $50 or so but this month I paid $825 only where the balance was over $1000. Cool!

May 19, 2018
6:22 am
Bill
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Sorry, I don't know why this is headed Tangerine Bank, I'm no good at starting new topics I guess - feel free to fix.

May 19, 2018
6:33 am
Top It Up
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Are you saying it's like a "forgiven" amount - do the statement balance numbers and actual balance numbers ever catch up with one another?

May 19, 2018
6:35 am
Loonie
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How does this get accounted for in the subsequent statement?
Presumably, if you owe 1000, but only pay 900 (for example), it would show a balance owing of 100. Evidently that is not the case, but I'm wondering how they make it go away.

It's never happened to me but I've never had that particular card. I did once have a CIBC card, for many years, but never had this experience.

I'm sure you've done the math, more than once, but I'm wondering if it could in any way be accounted for by returning purchases between the statement date and the due date, thus reducing balance owing at the time the bill is paid. Such items would show up on the next bill as credits and would eliminate the debt.

May 19, 2018
6:54 am
Bill
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I match every item on my statement every month with my (actually my wife's!) slips, including returns and credits, and all is well, everything accounted for, statement's fine. And it never reconciles or balances out later, they just take less out of my account than I expect so, yeah, it's forgiven. The previous month it was about $50 less, the month before then it was exactly the right amount. It's always been less than $100 but this month it's over $200 so now I'm really curious. "Our" average monthly balance on that card is usually between $1K - $2K.

May 19, 2018
7:20 am
Top It Up
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Well lucky you!

I've been a faithful CIBC customer for over 40 years AND they've never once shown me that kind of love and forgiveness.

And, to be fair, prior to putting the monthly statements on pre-authorized payment from my chequing account, THEY did forgive the interest due on unpaid balances when I missed a few.

May 19, 2018
8:17 am
mmlt
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Funny. Cibc visa here as well. No such luck for me. Their email notification for due statements is hit and miss but they are quick to forgive interest charges.

Don't get too comfortable. Payback is a b*tch!

I've been overpaid on paychecks though. Once they found the error and once they did not. I thought it prudent not to look a gift horse in the mouth.
It was not worth the feeling of guilt or waiting for the axe to fall resulting in a very small cheque.

May 19, 2018
9:27 am
Norman1
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Bill said
I match every item on my statement every month with my (actually my wife's!) slips, including returns and credits, and all is well, everything accounted for, statement's fine. And it never reconciles or balances out later, they just take less out of my account than I expect so, yeah, it's forgiven. The previous month it was about $50 less, the month before then it was exactly the right amount. It's always been less than $100 but this month it's over $200 so now I'm really curious.…

Could CIBC be taking whichever is less, the balance on the latest statement or the balance on the due date?

Between the statement date and the due date, when returns are less than the new charges CIBC takes the statement balance out of your account. When returns are more than the new charges, CIBC takes the lower current balance on the due date out of your account.

May 19, 2018
12:52 pm
Bill
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That's why I asked, Norman1, I knew someone here would have an idea to solve the mystery.

After intensive review of my last 4 statements (which I was trying to avoid, lazy) I can see that any credits after the statement date (i.e. they appear on the next statement) but before the payment date are deducted from that payment. Then the balance owing for the next statement is "overstated" because though the credit is listed there it's not deducted from that statement balance. So it's just a timing thingy for some credits only, CIBC is moving them up. Must be nice people, those CIBC folks - maybe not a good sign for shareholders!

I apologize if this is standard practice and well-known already to most, over all these years I've never really checked to notice that my "purchases" balance in fact is not net of credits in the period if they were already deducted from the previous month's payment because they were posted before that month's payment date. Plus I've not noticed this for my other credit cards and as it was in my favour (so I thought) I was happy not to investigate.

May 19, 2018
6:14 pm
Norman1
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I don't know if that handling of credits from returns is standard.

There are some intricacies about such credits. I remember reading one credit card agreement that said return credits between the statement date and the due date don't count towards the minimum required monthly payment.

As well, it looks like the CIBC Dividend VISA Infinite card counts the return credits towards paying the full balance off. For example, $1,000 statement balance will only require a $800 payment to "pay off in full" when there are $200 of return credits between statement date and due date.

May 19, 2018
6:17 pm
SavingIsGood
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You will pay less than balance if you have returns.
Balance on statement: $1000. You did return something for refund (credit $50). CIBC will take $950 from you pre-authorized account at payment due date.
Don't you worry. Bank will take very cent from you; sooner or later...

May 19, 2018
10:30 pm
Loonie
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Loonie said
I'm wondering if it could in any way be accounted for by returning purchases between the statement date and the due date, thus reducing balance owing at the time the bill is paid. Such items would show up on the next bill as credits and would eliminate the debt.  

Bill said

After intensive review of my last 4 statements (which I was trying to avoid, lazy) I can see that any credits after the statement date (i.e. they appear on the next statement) but before the payment date are deducted from that payment. Then the balance owing for the next statement is "overstated" because though the credit is listed there it's not deducted from that statement balance. So it's just a timing thingy for some credits only, CIBC is moving them up. Must be nice people, those CIBC folks - maybe not a good sign for shareholders!

So, my hunch was correct.

Now that I think further about some past experiences among family members, I can confirm that the HBC Mastercard (CapitalOne) and the Canadian Tire Options Mastercard both reduce the amount taken out of your bank account by the value of any Returns between statement and due dates.

May 20, 2018
4:25 am
Top It Up
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I guess the reason that I've never experienced this credit card balance phenomenon is because I think I've only had one returned item in the past 5 years and it's likely the purchase/return occurred within the same period.

May 20, 2018
10:36 am
Bill
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Yes, Loonie, you are correct, I erred when I overlooked that it was you who first indicated the possible answer to my question.

May 20, 2018
7:31 pm
Loonie
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No problem, Bill. I figured I'd been too long-winded!sf-wink

December 24, 2020
8:12 am
topgun
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Norman1 said
I don't know if that handling of credits from returns is standard.

There are some intricacies about such credits. I remember reading one credit card agreement that said return credits between the statement date and the due date don't count towards the minimum required monthly payment.

As well, it looks like the CIBC Dividend VISA Infinite card counts the return credits towards paying the full balance off. For example, $1,000 statement balance will only require a $800 payment to "pay off in full" when there are $200 of return credits between statement date and due date.  

Several of the big banks have this procedure. Assume you have pre-authorized debit for full new balance on due date. If you have returns or make additional payment(s) before due date the pre-authorized debit payment is reduced by the credits and payments. I noticed this with CIBC Visa, BMO MasterCard, RBC Visa, and Scotiabank Visa. With Capital One MasterCard the full new balance is withdrawn even if you have returns or make extra payments.

Have a Great Day

December 24, 2020
8:40 am
AltaRed
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topgun said

Several of the big banks have this procedure. Assume you have pre-authorized debit for full new balance on due date. If you have returns or make additional payment(s) before due date the pre-authorized debit payment is reduced by the credits and payments. I noticed this with CIBC Visa, BMO MasterCard, RBC Visa, and Scotiabank Visa. With Capital One MasterCard the full new balance is withdrawn even if you have returns or make extra payments.  

That is my experience as well. I don't find either methodology an issue. By the time the previous balance is paid, there are new charges in the accounts anyway.

December 24, 2020
10:19 am
Kidd
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How many of you remember Eddie Haskell? He found a way to honestly beat the big banks and prosper in doing so.

With his credit card he bought something that he wanted, say for $200. When the bill came due... Eddie bought something for someone else at a higher cost than his bill, say for $250. He demanded instant payment from the other party. Eddie then paid his $200 credit card bill and pocketed the extra $50 he received. He was ahead of his time.

Eddie became a police officer, he recently died on May 18 2020.

Merry Christmas to all, play safe.

December 24, 2020
12:54 pm
topgun
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Eddie Haskell was a fictional character that was in Leave It To Beaver TV comedy from 1957-1963. He was played by Ken Osmond. Yes he passed May 18, 2020.

Have a Great Day

December 24, 2020
12:55 pm
Norman1
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Kidd said
How many of you remember Eddie Haskell? He found a way to honestly beat the big banks and prosper in doing so.

With his credit card he bought something that he wanted, say for $200. When the bill came due... Eddie bought something for someone else at a higher cost than his bill, say for $250. He demanded instant payment from the other party. Eddie then paid his $200 credit card bill and pocketed the extra $50 he received. He was ahead of his time.

Not sure how that would work out. Next month, the $250 purchase would be on the credit card bill. He would only have $50 in his pocket and no $250 item to return.

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