Consumer complaint received 2018-07-06
Company: DISCOVER BANK
State: AL
Product: Credit card or prepaid card
Sub-product: General-purpose credit card or charge card
Issue: Problem when making payments
Sub-issue: Problem during payment process

Complaint:
Date XX/XX/18 Time XXXX CST, Duration 15 min 21 sec XXXX CST, Duration 24 min 32 sec I called Discover about their error in allocation of the payments that I have been making. First I had given basic info regarding my knowledge of the how the payments are to be allocated, and as I was explaining to them about my knowledge of the practice, the service representative straight out informed me that the minimum payment gets applied to the lowest interest balance rather than being distributed to the all of the accounts according to the percentage of the balance that each balances contribute to the total balance. First of all, I have been paying monthly payments in excess of roughly {$200.00} with the minimum payment being roughly {$100.00} each month ... to total {$300.00} in monthly payments that I have been making. So basically third of my payment gets applied to the LOWEST interest balance and the remaining {$200.00} gets distributed according to the credit card act of 2009. 

I am not complaining about how the {$200.00} is being allocated, but I am complaining about how {$100.00} is being allocated to the LOWEST interest balance. 

The first service representative told me that it was the lawful that the Discover allocate/designate the minimum payment to the lowest interest balance because of the credit card act of 2009. I had asked the person to provide me with the means to have a look at the act myself, which she was very helpful. So I disconnect with the first person because I found the act, but upon reading the act, where it talks about the allocation of the payment, ( 164. Prompt and fair crediting of payments ( a ) IN GENERAL.Payments ; ( 2 ) by inserting, by XXXXXXXX XXXX on the date on which such payment is due, after in readily identifiable form ; ( 3 ) by  striking manner, location, and time and inserting manner, and location ; and ( 4 ) by adding at the end the following : ( b ) APPLICATION OF PAYMENTS. 
( 1 ) IN GENERAL.Upon receipt of a payment from a cardholder, the card issuer shall apply amounts in excess of the minimum payment amount first to the card balance bearing the highest rate of interest, and then to each successive balance bearing the next highest rate of interest, until the payment is exhausted. ). 

It say NOTHING about how the minimum payment MUST be applied to the lowest interest balance. So I called Discover back regarding the loophole in the ACT of 2009, about how the Discover CHOSE to interpret it has the minimum payment HAS to be applied to the balance with the lowest interest, and saying that they are lawfully doing it? 

The second person also said that the " practice '' is lawful and that they have to do it, and I plainly told her that isn't so. 

I finally ended up speaking to the manager where he informed me that it is Discover 's policy to apply the minimum payment to the lowest interest balance, and when I told him that the credit card act was made to protect the consumers and that Discover 's policy is a blatant disregard for that well meant " protection. '' The manager then proceeded to trying to convince me that how such policy can in " certain situations '' can help the consumers. In other words, he was justifying Discover 's policy? He even tried to convince me that me reporting them was not necessary because what they are doing is right. Because a small percentage of consumers " might '' benefit through that policy, it is justified? I don't think so. 

He did say that he would let the HQ know about my complaint, as I blatantly told him that I would report Discover about it's unfair utilization of the payment and he provided the contact info to CFPB.

Company response to consumer: Closed with explanation