Over the last several weeks we’ve put a lot of mileage on our rewards credit card. We’ve been stocking up on gift cards from our local grocery store due to the fabulous deal that they offered during tax season. The use of our rewards card here sweetened the deal even more, since we get 5% cash back on grocery purchases, and the purchase of gift cards counts as groceries. Unfortunately, the credit limit on this card was not high enough for us to be able to put all of the cards that we wanted to buy on it in one cycle, so I made two mid-month payments to ensure that we could receive all of the rewards we had coming.
Because of a too strange to explain here situation, we actually charged $3,000 online and decided to cancel the order before it shipped. The merchant was great about the order cancellation, and we had no problem with this. I noticed on the credit card website, however, that our available balance went down significantly. I know how credit card transactions work, so I assumed that our card was authorized for the big purchase, which reserves the money on our card for some period of time, but the charge was never completed.
A few days went by and our balance was down to less than $100. My experience was that authorizations only last for a couple of days at best. I waited another two days, but there was no change in the available balance. I sent an email to the credit card company’s customer service department inquiring about why the available balance was so low. Here is the response that I got:
“Upon review of your account, the reason you are showing only $79.00 in available line of credit because you utilized your entire line of credit during this billing period in the amount of $XXXX.xx. According to the terms of [credit card company] Revolving Card accounts, you may utilize your entire assigned Line of Credit one time within a billing period. Even though you are making payments within the billing period, your available line of credit will not be reset until the next statement closing date on 04/30/09.”
So basically the credit card company was saying that the credit limit applies not to my balance but rather to how much I charge in total in a cycle. I thought this response was strange for a number of reasons. The first of which was that I had never heard of such a thing. The second was that the amount I had charged was already greater than 125% of my credit limit. I didn’t happen to have the terms of my account handy, so I took the company at its word and chalked this up as a way for the company to limit the amount of rewards they have to pay out each month.
Imagine my surprise when a day later our available balance suddenly increased by exactly $3,000. It seems to me that there are only two explanations for this: the first is that the credit card company took pity on our plight and gave us a break on the terms, in the amount EXACTLY equal to the purchase that we made and then cancelled. The second is that the authorization for the purchase finally rolled off the books. I’m going to assume it was the second, but I haven’t contacted the card issuer to confirm.
What intrigues me the most about the whole situation is why the credit card issuer answered the way it did. Either the terms cited are true but not observed, or they are not true and the customer service representative flat out lied. If the latter is true, why? Was it so hard to actually look at our account and see that there was an outstanding authorization that was limiting out credit line? I’m just baffled by the response on this one, and if the rewards program wasn’t so darned good I might consider at least calling them on this or even finding a new card to use. As it is, there’s been no harm, so no foul either.
Have you ever had a bank or credit card company do something bizarre like this?