The Debt Panel: 'Can banks reverse late payment penalty charges?'

The Dubai reader is seeking advice after missing a credit card instalment for the first time

Nick Donaldson / Getty

I missed paying my credit card bill by the due date for the first time and ended up paying it three days later.

I have now been charged a late payment penalty of about Dh240 and finance charges of Dh1,500.

I have considered setting up a direct debit instruction to pay off my credit card bill on the due date.

However, I always go through the statement to check my spending and if there are any errors before making the payment.

I feel angry that the bank has penalised me so hard for a single mistake despite being a long-standing customer who has always paid my bills on time.

Can I convince my bank to reverse the charges since I have a spotless payment history so far? Please advise. HK, Dubai

Debt panellist 1: Steve Cronin, founder of DeadSimpleSaving.com

There are terms and conditions, and then there is the flexibility of the bank to keep a long-standing customer happy.

The terms and conditions for your credit card should lay out in detail what happens if you miss your payment date.

As you have discovered, there is usually a hefty late payment penalty and then, potentially, also finance charges. This is a big part of how banks profit from credit cards.

Let us say your monthly statement begins on the first of each month and your payment date is the 15th.

You don’t have to pay any interest on a purchase made on January 2 until February 15, as long as you pay off that purchase in full by the 15th.

However, if you don’t make the full payment or miss the payment altogether, then the bank can punish you by charging interest from the day you made the purchase.

Suddenly, that January 2 purchase has 44 days of interest slapped on it. These are the finance charges you have been hit with.

It is definitely worth trying to get the finance charges and late fee waived, although I can’t promise you will succeed.

Your chance of success will increase with the seniority of the person you speak to, your persistence across different channels and the consequences if nothing happens.

Sending a message via your online card portal will probably result in your request being politely refused — these bank employees may have little authority to bend the rules. A branch manager or relationship manager has more authority.

If this approach does not work, you can try calling to cancel your card, stating your disappointment at the bank’s refusal to acknowledge a simple one-off mistake despite a spotless payment record.

Cancellation departments often have some ability to get fees waived.

Look into obtaining a card from another bank and be prepared to walk away from your existing card provider, otherwise you will be the one who blinks first at the point of cancellation.

You should definitely set up a direct debit for the full balance due, or at least the minimum payment.

Watch: Understand your finances

The minimum could lead to increased interest and bad habits of not paying off your card in full each month, but at least you will avoid late fees.

Your statement is sent to you well before the balance for that month is due, so you will always have time to check every item on your card statement.

Debt panellist 2: Keren Bobker, financial adviser and senior partner at Holborn Assets

It is unfortunate that you missed the payment date as the bank is within its rights to charge you a penalty for late payment.

Such penalties, no matter how punitive they may seem, can be legally charged even if you are only one day late.

The details of this will be in the terms and conditions of the credit agreement you signed when you applied for the card.

My advice is to set up a direct debit to pay at least the minimum monthly amount, so this situation does not happen again.

The balance can then be paid manually after checking a statement if you do not want to arrange to clear it automatically in full each month.

If an error has been made, making the monthly repayment does not prevent an inquiry from being made.

If an error has been made, making the monthly repayment does not prevent an inquiry being made

Keren Bobker,
financial adviser and senior partner at Holborn Assets

Given that you say you have a faultless track record, you can ask the bank if they will waive the penalties but you will need to speak to senior staff, who have the ability to make these kinds of decisions.

People should also be aware that even missing one payment can affect their credit history as late and missed payments are registered at Al Etihad Credit Bureau. This can affect future requests for loans and credit cards.

This is another reason to make an automatic monthly repayment, so none are missed by accident.

Debt panellist 3: Carol Glynn, founder of Conscious Finance Coaching

Missing a credit card payment can result in late payment penalties and finance charges, as you have experienced.

In some cases, banks may offer to waive or reduce the charges if the customer has a good payment history and is requesting a reversal for the first time.

To request a reversal, you can contact your bank's customer service department and explain the situation.

You can mention your previous payment history and indicate that this was a one-time mistake.

They may ask you to provide some supporting documents, such as proof of payment, to verify your claim. Push for this if the initial response is no, as it is possible when you have a good record with the bank.

Automating your payments is a great way to avoid this happening. It also means you have one less piece of life admin to do each month.

In addition to setting up a direct debit instruction, you can also consider setting up payment reminders through your bank's mobile app or email alerts, which can help you remember to pay your bills on time or review your statement in advance of the amount becoming due.

It is important to review your credit card statement carefully each month to identify any errors or fraudulent charges promptly, so it is great that you do this already.

By doing so, you can dispute these charges before making the payment, which will help you to avoid paying for any unauthorised transactions.

However, disputes can take time to resolve, so to save on interest charges and more complications, you can pay your card in full and then you will receive a refund once the claim is processed.

The interest you paid for a short delay in payment does sound excessive.

Check with the bank on how it calculated your interest charges. Sometimes mistakes happen, so it is important to ensure the bank is calculating interest charges correctly.

This also highlights how expensive credit card debt can be and why it is so important to pay the balance in full each month.

In summary, contact your bank to request a reversal of the late payment penalty and finance charges, and consider setting up payment reminders and reviewing your statements regularly to avoid similar issues in the future.

The Debt Panel is a weekly column to help readers tackle their debts more effectively. If you have a question for the panel, write to [e-mail]