The Importance of Reading the Fine Print of Credit Agreements

Last week a concerned mother wrote to us here at GetOutOfDebt.org with a predicament with her son’s BillMeLater Account. Her concerns are as follows:

“This debt is just outrageous and needs to stop with the deferred payment that they are going to sock onto this debt and will never be paid off. There is no reasoning with them at all and I do not know what to do? Up in arms with them not trying to work out a payment plan without anything extra they are charging. It is you pay and then what you just paid is added on and added on again as it doubled in there fee’s. I need help in what to do to have them get this in my name and not my son’s. He is not responsible for this debt. He had no idea what fee’s was going to be added on after use. Credit limit was to be for $500.00 dollars and then the bill got up to $1,795.00 dollars with a $900.00 dollars pay off. He had no idea that they increase his spending limit with no email updates or even stop this form happening.”

I was able to get in touch with a PR representative, Meagan, about this issue. Meagan’s response is as follows:

“While we are unable to comment on the particulars of any individual account, we can point you to our Bill Me Later Account Terms and Conditions which clearly set forth the terms of the revolving line of credit that is extended to a customer, as well as the billing and payment terms, and applicable interest rates and fees.
The Bill Me Later account is subject to credit approval as determined by the lender, WebBank, Salt Lake City, Utah. The lender’s repayment terms and conditions are typical of those offered in the credit industry, reasonable and in no way unusual—customers who do not pay their bills are charged late fees and interest, depending on the terms of their purchase. 
In fact, many consumers choose to use Bill Me Later because there is no annual fee.  For the promotions offered occasionally, such as No Payments + No Interest if paid in full in 6 Months, there is no additional fee to get the promotion. As long as the bill is paid on time and before the expiration date of the promotion, a consumer does not have to pay interest for their purchase.
As is the case any time a consumer receives a line of credit from a bank, all Bill Me Later customers must review and accept the Bank’s terms and conditions prior to their purchase. The terms and conditions are clear, made available on the Bill Me Later website as noted above, and include a statement of the interest rate and fees on the account.
Additionally, we regularly work with our customers to resolve any issues or disputes and recommend that they get in touch with our customer service team directly if they have any questions or problems.  Our customer service contact details are also listed on our website.”

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After reading through the BillMeLater Terms and Conditions I was able to find specifics the borrower agreed upon with their account which were included in the complaint. Below I am including quotes and screen shots from the actual Terms and Conditions in regards to an increase in credit line, interest due and the promotional period of deferred payments.

If try to make a Purchase that would cause my outstanding balance to be above my Credit Line, you will treat that as a request to increase the Credit Line.

For example: If my Credit Line is $650, I have a $200 balance, and I try to make a Purchase of $500, you will treat this as a request for an increase in the Credit Line. If you approve this transaction, my new Credit Line will be $700 (the “highest balance”).

(iii) You may charge my Account for Interest and Fees. I authorize you to charge this Account for interest, any Fees, costs of collection, and amounts that I agree in this Agreement to pay.

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Deferred Interest Purchases. From time to time, you may offer Promotional Purchases with a Deferred Interest option. All Purchases subject to the same rate, Deferred Interest terms and Expiration Date will be a single part; at your option, you may consider any Deferred Interest Purchase to be a separate part, or may consider Deferred Interest Purchases from different Merchants to be different parts. If I pay the balance on the Deferred Interest part (which is called the “Deferred Interest Balance”) in full by the Expiration Date, you will not charge any interest for that part. You will calculate the interest for each Billing Cycle prior to the Expiration Date and disclose it on the Billing Statement as the Accrued Deferred Interest. If I do not pay the balance on a Deferred Interest part of the Account before the Expiration Date, you may charge my Account, in the Billing Cycle in which the Expiration Date occurs, interest on each Promotional Purchase from the date of each Purchase (each “transaction date”).

End of Promotional Terms. If a part is subject to a special promotional rate or Deferred Interest term which ends as of a certain date (“Expiration Date”), I authorize you to move, on or after that date, the balance remaining in that part to the Standard Purchases part of the Account, and it will be subject to the repayment and interest terms for Standard Purchases.

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It is important when applying for a line of credit to read over the terms and conditions carefully of the agreement or promotion you elect into. Once agreed upon you enter into a legally binding contract for the debt and it is best to be clear about the terms, otherwise you face the chance of being surprised by a large balance like our writer’s son.

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If you find yourself in a similar situation be sure to re-read the terms agreed upon and contact your creditor to try and work out a payment plan. Usually creditors will be helpful in working out a plan as long as it coincides with the terms and conditions.

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