Is my CC Bank violating Federal or State Regulations?

[floridacoast]

What is the name of your state? FL

I have worked hard to improve my credit over the years. Recently, I was approached by a well know company with an offer to open a Business Visa Card. The card is a true company card so it is not reported in my personal credit -- so this is not the issue. The problem I have is with the misinformation they gave me about their promotion and alocation of payments.

They offered 18-months no interest on balance transfers. Because I recently purchased equipment for my company with a different Biz CC, this offer was very appealing because it would save me a considerable deal of interest while paying it off. The representatives, by phone, verbally assured me the promotion was like others and payments made will first go towards fees/interest/and revolving charges before paying down the no interest transfer.

I went ahead an issued the transfer and I used the CC for regular monthly business expenses which I regularly pay off at the end of the month. This was 2-1/2 months ago. To my surprise, my payments went / were alocated to the Zero Interest Transfer amount and NOT the accruing revolving charges. Luckily, the interst rate is only 7.99%, but this is 7.99% I should not pay. After all, they verbally told me that payments would go towards revolving charges BEFORE the zero-interest transfer.

Long story short, I called them and they apologized if there was a "misunderstanding" -- They kept referring to the allocation payment distribution rules in the small print of the CC disclosures. In their disclosures, it apparently states that all payments will be allocated to Fees and interest charges first THEN to the lowest interest rate first. In other words, I will have to pay off the zero interest amount BEFORE I get to pay off the charges accruing interest.

Fine, they duped me ... What is in writing takes precedence over verbal promises ... Buyer Beware ... It was my fault and I take full blame for not reading the small print carefully. I plan to never use this card again until the balance is paid off.

OK, but that is not my issue ... Here is my issue and question:

The CC company is allocating actual CREDITS/RETURNS from merchants towards the no interest transfer RATHER THAN deducting them from the actual purchase balance (which is accruing 7.99% Annual interest. Does this violate ANY Federal Banking regulation? I really think it should because these CREDITS/RETURNS are linked to actual charges made .. they have nothing to do with the zero percent transfer.

if this violates any regulation then please let me know who I should contact/write/call and what violation they have made (if you have a reference). I would really like to give this CC company at least a small slap on the face for the lies they gave me.

Thank you.

 

[Debt Guy]

You are bound by the written agreement. What you have described as their practice for allowcating payments sound pretty traditional.

What you are told on the phone is meaningless. First, it is your word against theirs. Second, some barley over minimum wage clerk is hardly the right source of information.

If it ain't in writing, it never happened.

I can't see any regulation that has been violated.

 

[mjcrules]

Will guarantee the allocation of payments and credits goes first to the promotional rate balances per the million word cc policy you told them you read and agree to be bound by.....I had a card once that would only let you make 1 payment per week and not more than 50 over current balance! Your best bet is to find another card with equal or lower interest rate for purchases and/or find one that has a nice promotional rate on purchases and use that card solely for those. Any balance transfer you attempt will, surprise, be transferred from the promo interest rate balance first b4 the interest bearing balance. GL

 

[floridacoast]

But is there any federal regulation that restricts a CC Bank from allocating merchant "credits/returns" to anything else OTHER THAN the original purchases?

For instance, let's say you buy a Xerox copier on 12/05/06 for $1000 and the regular interest rate on that would be 9.99% annually. Next month, on 01/15/07 you make a balance transfer of $8,000 at 0.0% interest for 18 months. On 01/20/07 it turns out the Xerox is not adequate, so you return it for a full refund of $1000 at the ABC Office Store. One would expect the $1000 credit to be allocated to the purchase it is linked to (after all, when one does a return, it should be allocated towards the original purchase -- is it not?). But, instead, the CC bank allocates the store return/credit towards the 0.0% interest transfer which LEAVES the purchase of $1,000 to collect interest.

Is this legal? If it is, then oh well. But, if you know of any regulation which makes this unethical or illegal, then i will gain great satisfaction by reporting them before i cancel the card. Please refer to any regulation #s or links.

Thank you.

 

[Debt Guy]

But is there any federal regulation that restricts a CC Bank from allocating merchant "credits/returns" to anything else OTHER THAN the original purchases?

I am not aware of any such requirement and I would be very surprised if there was. Your issue is a matter of the contract between the card issuer and the card holder. The governing document is the cardholder agreements. These agreements are "contracts of adhesion" -- which means take it or leave it. Once you use the card you agree to whatever is written in the agreement. As you might guess, these agreements are very one sided.

Put yourself in the shoes of the bank for a minute. You grant a loan at very preferential rates because you think the future revenue potential is worth the short-term sacrifice. You want that part of the balance (the subsidized part) reduced as quickly as possible so that you can maximize your income. If you were the bank you would do exactly the same thing.

In the end, all parties always act in their own self-interest.

Large banks are all regulated by the Comptroller of the Currency and the Federal Reserve Bank. Contact the FED in your area and talk to someone.​