Can you tell me if you know or who does the following questions about Bank of America credit card:
1. Is it legal for a credit analyst to transfer a $400 3.99% balance to a 19.99% balance?
2. Is it legal for the Bank to not apply from a payment…the finance charges to all balances? In other words I am finding since the credit dept screamed at me cause they couldn’t scare me…the above has happened on my card, which I closed to see what they are doing and now my 19.99% cash advance is going up each month as if no finance charge was being applied. I know they can apply what is left over in a payment to any balance but I thought the bank was required to credit that part of my finance charge from the 19.99% balance to that balance. It appears to be going up $70.00 a month with no crediting and that $70.00 is the finance charge for one month. It is as if I am not making any payments on the largest percent. Is it legal?
Thanks for any help.
Is it legal, probably. According to most terms and conditions on credit cards the bank will apply payments first to the lowest interest rate balances and then when those are completely paid off they will apply payments to the next highest interest rate balance.
Below is an excerpt from a Citibank card I reviewed and covered this operating procedure.
In the next paragraph Citi goes out of their way to point out that the 0% offer does not extend to cash advances and that payments are applied to lower APRs on your account before higher interest charged. (From the online terms and conditions “We apply your payments to low APR balances first. You cannot pay off higher APR balances until you pay off lower APR balances. That means your savings from any promotional APR offer will be reduced if you make purchases or cash advances that have higher APRs.”) The purpose of this is to maximize the interest charged to you. So if you do get this card and take a cash advance on it, all the money you send will be applied to the 0% part of your bill while the really high cash advance part will be building up interest. – Credit Card Review – Citi Platinum Select MasterCard Mailing
The best thing to do would be to get a copy of the terms and conditions for your specific card with Bank of America and read them to find out what they can do to you, with the permission you’ve already given them. You will be shocked.
And while banks do things to maximize their profit and prevent you from getting out of debt quickly, I’ve rarely seen them do things that were not clearly spelled out in the terms and conditions.
Best way to avoid these problems is to not carry a balance and pay whatever you charge off in full each month.