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22 Jan 2022

Credit card bills due on bank holidays - what are your rights?

Some Sainsbury's Bank customers were hit with a late fee after the New Year's Day bank holiday
A woman checking her credit card statement in dist

Sainsbury's Bank has apologised after some customers were incorrectly charged late payment fees for bills due on the New Year's Day bank holiday.

With workers set to enjoy an extra bank holiday this year to celebrate the Queen's Platinum Jubilee, Which? looks at what happened with the Sainsbury's Bank system and your rights if your credit card bill is due on a bank holiday.

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Sainsbury's Bank billing error

Some Sainsbury's Bank credit card customers reported being charged a £12 late fee when their monthly payment, due on 3 January (a bank holiday), was taken on the next working day.

A spokeswoman told Which? it was investigating the issue which affected a 'small number of customers.'

She said: 'We're sorry for the inconvenience this may cause and are automatically refunding customers to put this right.'

She also confirmed that customers' credit files would be unaffected.

If you have a credit card with Sainsbury's Bank, you should check your statement and get in touch if you spot any mistakes.

What happens if your credit card bill is due on a bank holiday?

Which? contacted other major credit card providers to ask what policies they had in place to stop customers from being charged if their bill was due on a bank holiday.

Most providers told us if the direct debit was due on a bank holiday, this would be taken on the next working day. They all confirmed customers would not experience any late fees.

Some banks have more processes in place to stop this. For example, Barclaycard told Which? it automatically adjusted payment dates so they would not fall on a bank holiday. It also has a built-in 'grace period' of a few days on missed/late payments so even if there was a delay to the direct debit, customers wouldn't incur late payment fees as long as it was made during this timeframe. It also sends customers reminders about the payment where possible.

The table below sets out what providers told us about their bank holiday billing policy.

Credit card providerPolicy if credit card bill direct debit is due on a bank holiday
American ExpressDue dates would not fall on bank holiday due to set up
BarclaycardThe due date is automatically adjusted so it falls on the next working day. Built-in 'grace period' to allow for delays so no fees are charged.
Co-operative BankPayment is taken on the next working day and no late fee
HSBCDoes not schedule due dates on bank holidays
John LewisPayment is taken on the next working day and no late fee
LloydsPayment is taken on the next working day and no late fee
M&S BankPayment is taken on the next working day and no late fee

Source: Credit card provider response when asked by Which? in January 2022.

What to do if you are wrongly charged a late fee

If you find an unexpected fee on your credit card statement, you should contact your credit card provider. If it has made a mistake on a direct debit resulting in bank charges, it's up to them to sort it out for you.

You should write to them and ask for an apology for the error and that it puts matters right immediately.

If your provider delays in sorting out the mistake, you should also ask for additional compensation. Don't allow it to claim that the refund or the costs count as compensation.

Will a late fee affect my credit score?

Late payments that are recorded on your credit report can lower your credit score. This is because overdue payments can suggest you're struggling to manage your finances.

So, if you've been charged a late fee in error, you should check if it has been reported to any of the three credit reference agencies in the UK (Experian, Equifax, and TransUnion).

If it has you can file a dispute with the CRA that has it on your report. They will then contact the lender on your behalf, although you can also dispute the record with the lender directly.

The lender will have to respond within 28 days and if they don't, the disputed error will be removed from your report or suppressed. The CRA must get back to you with the findings from its investigation within a month.

How to manage your bills with direct debits

Direct debits can be a useful tool to manage your credit card payments - especially if you're at risk of forgetting when the bill is due.

Here are our top tips for managing one.

Think about the payment date

Some providers will give you a choice of payment dates. If so, choose a date that best suits your cash flow - just after your salary is paid for example. This way you can ensure there is enough money in your account.

Always check your statement

Direct debits are usually shown with a DD alongside the payment on your statement. Make sure the amount and date paid tally with what you've agreed to. You should be notified in advance - usually 10 days - of any changes to amounts to be paid or payment dates.

Know your rights

The Direct Debit Guarantee ensures that in the event of an error being made in the payment of your direct debit, you will receive a full refund from your bank or building society. However, It cannot be used to address contractual disputes between you and the billing organisation.