My Personal Finance Journey

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Small Balance Adjustment

Contributed by mm | August 14, 2004 6:11 PM PST

What is small balance adjustment? It's a well-kept small secret in the credit card business. If your credit card balance at statement date is a very small amount, the issuer will usually add a credit of the same amount so your statement will show no balance to pay for.

I personally experienced this at both Providian and FirstUSA/BankOne for three times when I closed month with a balance of $0.25 to $0.51. Why did I encounter such a small balance? I usually test a new card by driving to a self-serve gas station (is there a better place to test whether a new card is working?) and making a gas purchase of a quarter or two. Every time, I found the respective issuer gave me a credit at statement date to adjust the balance to zero.null

Why do issuers want to do you such a favor? I googled a lot but there is very little information on this topic. My guess is the cost to handle a payment is comparatively higher than the small change waived. Imagine if you send out a check of $0.51, the issuer needs to staff warm bodies to open the envelope, scan your account number and put the amount into the system, not to mention a banking fee to clear your check. But on the other hand, leaving even a $0.01 balance opened the door for late payment penalties and default APRs, so issuers may not be worse off to keep the small balance in the statement. Maybe these issuers know I am diligent in tracking money and making timely payments, so there is no chance to earn such penalties from me, but I doubt issuers keep different small balanace adjustment policies with people of different credit profiles.

I'm hesitate to think this as another avenue to save month. After all, even if I have 20 dormant cards and I can pocket $0.50 small balance adjustment per card per month, it's only $10 per month. Every $0.50 will take around one minute for gas refilling, and two or three minutes for online tracking, so the payoff is still low at $10/hour.

Do you have any experience with small balance adjustment?

This Post Has Received 2 Comments. Share Your Opinions Too.


Alex Commented on August 15, 2004

I recently had the same experience. I had paid my credit card balance online but must have typed in the wrong numbers, because I ended up with a balance of a few cents. Sure enough, it was adjusted to zero by the credit card company. I was amazed but as the story above points out, it makes a lot of sense.


Star Commented on August 16, 2004

It's interesting that you had such a positive experience. My only experience with a small balance was not as good. I once had about $20.25 on a credit card account; the minimum payment was about $10 for that month. However, after the close of the monthly statement, I received a credit back from the merchant for $20, leaving me with $0.25 on my account. Naturally, I assumed that I don't have to pay (to make on-line payment, as I always do, the amount has to be over $1, and mailing the payment didn't make sense because that would cost me $0.37 in postage, which is higher than the actual payment amount!). Well, imagine my surprise when I was hit with a LATE fee of about $30, because "credits don't count as payments." This was the most ridiculous thing I've ever heard. Thankfully, the bank did reverse the late charge (as they will do once in each 12-month period), but this taught me a bitter lesson about keeping even a tiny balance on my credit cards...


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