Consumer complaint received 2017-09-17
Company: U.S. BANCORP
State: IL
Product: Vehicle loan or lease
Sub-product: Loan
Issue: Managing the loan or lease
Sub-issue: Billing problem

Complaint:
My complaint is with US Banks payment processing / allocation when their customers send extra payments in an attempt to pay down principle quicker / pay less interest. I made several large payments ( over 2 times my minimum payments ) to pay down my principle quicker but I realized my principle was not going down as quickly as it should have been. Im actually in financial services and would say that I have a far better understanding of how lending products work and I was even confused with US Banks payment practices so Im sure there are many being similarly deceived and overpaying interest on their loans. There is a lack of transparency, inconsistencies by payment channel ( i.e. branch vs. mobile app ) and cumbersome payment interfaces. Ive included a contact log of my discussions with US Bank where I was told my previous payments would be reallocated to principle instead of being applied to my next minimum payment. After over 2 weeks of no activity, I called back a 3rd time and was told that they can not help me ( I received NO proactive communication from US bank ). I asked to speak to a supervisor and was told I would get a call back that evening ( I received no callback ). 
Heres some specific deficiencies with US Banks payment processing : 1. Confusing mobile payment language ( see screenshot of US Banks mobile payment screen ). The first overpayment I made was a $ XXXX payment through the US Bank XXXX banking app. I wasnt sure which option to select to pay down principal. The intuitive option would be to select the Principal payment option but then I read the disclosure associated with this option which indicates that A Principal Only payment may be used only if no Minimum Payment is due. I technically had a Min Pay due the following month so I did not choose this option and simply assumed the Other amount option would apply any extra payment to principle. The Other Amount disclosure is ambiguous and not helpful. It indicates Any amount in excess of the Minimum Payment will be applied to either outstanding fees, interest or principal. Shouldnt it just simply state extra payments will be applied to your next min payment??? 
2. The Branch does not even ask how a customers overpayment should be applied to their loan. I was told by the first US Bank call representative that branchs can not apply extra payment to principle. Not sure whether this is true but it certainly is not disclosed. 

The end result of these deficiencies is that customers who are making extra payments with the intention of paying less interest are actually just paying the same amount of interest and just paying their loan down faster. I ask that US Bank honor what they originally committed to doing and that they look into improving the deficiencies that Ive highlighted above. 

US Bank XXXX XXXX 1.XX/XX/XXXX My first call to US Bank to inquire about why my principle was not lower as a result of my overpayments. The representative indicated that several of my overpayments were applied to my next minimum payment instead of being applied to principle. The representative identified 3 overpayments in particular that she was submitting to have reallocated to principle ( 2 of these payments were branch payments of {$1500.00} and {$1000.00} ; my min pay is only {$470.00} ). The US Bank branch did NOT ask me how I wanted to have my extra payment applied. The representative took the time to research US Bank policy and indicated to me that there was NO mention of how far back payments could be reallocated. This representative was very helpful and genuine in trying to assist me. 
2. XX/XX/XXXX I called back to check on the status. I was told by the representative that they saw the ticket opened on the account but I needed to allow for 3-5 business days and account for the XXXX XXXX holiday when they were closed. He reassured me that this would still be done. 
3. XX/XX/XXXX I called back since I could see no change to the balance of my account and it had now been 2 weeks since I was told my payments would be reallocated. The US Bank representative told me that the back-office request to reallocate my previous overpayments to principle had been cancelled and that I had been misinformed by the previous agencies that my payments could be reallocated. I advised that this was unacceptable as 2 previous agents told me this was going to happen. I asked to speak to a supervisor. The agent advised that their supervisor was unavailable and that they would call me back. I received no callback and still no letter from US Bank indicating what was promised to me could not be processed.

Company public response: Company has responded to the consumer and the CFPB and chooses not to provide a public response
Company response to consumer: Closed with explanation