Back in June, I asked one of my banks for two credit cards, one in Canadian Dollars and the other in US Dollars. I didn’t need them but I thought it was good to have them as a backup plan in case I have a problem with any of my other cards while overseas. So they sent me the cards, and I traveled. Thankfully, I never needed these cards during my travel but I felt it was a good thing that I made them. Or so I thought…

The moment I got back to Montreal I checked my mail, and I saw 4 statements from my bank for these cards – the first two were due on July 11, and the second two were due on August 10. Here’s what happened:

• My bank “did me a favor” and offered, for the very reasonable fee of $99, 2000 Air Miles that I will never ever use in my life. That offer was on my Canadian card. Because I missed the payment on my first invoice, they charged me an interest for that offer on my second invoice.

• My bank charged me a $25 fee (which they said they were going to waive when I asked for the cards) on my US Dollar card. Again, I got charged interest on my second invoice.

When I saw that I missed the first payment, I panicked as I thought this would have definitely affected my credit score (a credit score is everything in the US and Canada for those who don’t live in this part of the world) and I called the bank (that was August 9^th). I told the lady on the other line the story, and she reversed both charges – she also reversed the interest. I then asked her: Will this affect my credit?

She told me no, because you only missed one payment on your credit cards, but your credit card score will be affected when you miss two consecutive credit card payments. She explained to me how the process works in details:

• You owe some money on you credit card, the bank sends you a statement.

• You can pay the full amount of your statement or just the minimum payment.

• If you missed the minimum payment then you will be only charged interest on next month’s payment (which what would happen if you didn’t pay the full amount anyway). You will also be alerted that you must pay at least the minimum payment.

• If you missed the next month’s payment, then your credit score will be affected, and they might increase your interest rate immediately.

• If you missed another payment, then your credit score will go down further, your interest rate on all your products will increase (with that bank, because you will be deemed a high risk client), and your credit card will be blocked.

• If you still don’t pay your credit card, then the bank is most likely to seek legal action against you. Generally, Canadian banks do not resort to collection agencies – they have their own collection departments.

This article (as well as all other articles on this website) is an intellectual property and copyright of Fadi El-Eter and can only appear on fadi.el-eter.com.