Personal Finance

Pre-authorized payments on my credit card

  • Last Updated:
  • May 23rd, 2015 8:51 am
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[OP]
Deal Addict
Jan 2, 2015
1633 posts
638 upvotes
Toronto, ON

Pre-authorized payments on my credit card

I have a PCF credit card, and they (along with many other card providers) offer a pre-authorized payment option.

By mailing the provider a PDF from their site, you can give them your banking information and tell them whether you want them to pay just the minimum amount or the whole statement amount. However, I noticed afterward that the payment will be made on the due date, not a few days before. (I'd rather pay on the statement date.) As a result, I'm worried that my payments might end up late.

I tracked down other providers' forms, and they all say the same thing about timing. None give an earlier option. Walmart's credit card was the only exception when it came to explaining things; they pointed out that if your statement date falls on a weekend or holiday (so the money won't be removed from the bank account that day) they will take the money out the next available day and not charge you a penalty for being late.

I see the occasional comment that you should set up this sort of system so you never get hit with interest charges, but I wonder if anyone ever got into trouble due to payments being "late".
6 replies
Deal Addict
User avatar
Oct 8, 2014
1015 posts
227 upvotes
Unionville, ON
I believe being late by a day will not impact your credit score. Their systems are designed to account for some reasonable tolerance. Someone correct me if I'm wrong.
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[OP]
Deal Addict
Jan 2, 2015
1633 posts
638 upvotes
Toronto, ON
A day late won't affect the credit rating; I think you need to be 7 to 30 days late before you get hit with that. (For all I know, always paying three days late will never hurt your credit rating.) However, I'm more interested in avoiding interest penalties.

If you pay by the due date, you take advantage of the interest-free period (usually 21 days). If you're one day late, you lose that for that whole 21 day (or more) period.

I'm not sure what happens if you don't pay the minimum by the due date, as I never intend to pay late anyway.
Sr. Member
User avatar
Jan 1, 2008
533 posts
185 upvotes
Brossard
It really would depend on the financial institution, but I've never seen anyone charged with a late payment when they have a PAP even if their payment is coming from another bank. I would presume that it would be the same for all the major banks as our systems are all pretty similar.

For late payments affecting your credit, that also varies per bank. We won't report you unless you are over 30 days late. Some institutions report you after a week.
Deal Addict
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Nov 18, 2012
1398 posts
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Toronto
Just my 2 cent, remember some banking CS told me it won't hurt credit score unless over due more than 20 days. Not source to confirm it.
Simple is the best.
Member
Mar 19, 2015
293 posts
58 upvotes
For pre-authorized payments, your credit card issuer credits your account the payment amount, on the payment due date. The amount is then sent to your bank to be cleared. If the amount is cleared by your bank, you have nothing to worry about. Just make sure the funds are there.
[OP]
Deal Addict
Jan 2, 2015
1633 posts
638 upvotes
Toronto, ON
Thanks Emeralds. I ask because I have a metropass deducted from my account, and once or twice gave the CRA a PAD, and each time the money was removed from the account one day late. There was no credit issue, of course, and the CRA won't care about 1 day's worth of interest either.

I was much more worried about being charged interest than a hit to credit. I wish they'd take the money out before the due date.

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