Consumer complaint received 2018-09-27
Company: UNITED SERVICES AUTOMOBILE ASSOCIATION
State: MI
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:
On XX/XX/XXXX, I drafted a convenience check against the above credit account in the amount of {$10000.00}, subject to 0 % APR through XX/XX/XXXX. This convenience check balance is referred to as a promotional balance transfer on my statements. In the subsequent months, I made minimum payments on this balance, plus additional payments to cover the amount of any new purchases. 

It appears that, from at least XX/XX/XXXX, USAA applied my payments to the promotional balance transfer amount, before applying the payments to my new purchases. However, page 14 of USAAs Credit Cardholders Agreement states that [ a ] mounts paid in excess of the Minimum Payment are applied to the balance with the highest APR. This is the same language as required by the Credit Card Accountability Responsibility and Disclosure Act of XXXX. 

Payments that I made from XXXX to XX/XX/XXXX should have been applied first to any new purchases on each statement, as these balances were subject to interest ( due to being outside of the grace period ). Instead, USAA used these payments to reduce the promotional balance transfer amount that was not subject to interest. 

The net effect of this error is to subject a greater portion of future balances to interest. Indeed, I was charged more interest on my XXXX statement ( {$18.00} ) than on my XXXX statement ( {$14.00} ), despite having paid for all new purchases in the intervening period and having charged less new purchases in XXXX ( {$820.00} ) than in XXXX ( {$2000.00} ). Even more counter-intuitively, USAAs method of applying my payments will result in me incurring interest going forward, even in months in which I do not make any new purchases. 

I called USAA on XX/XX/XXXX several times. Generally, representatives were unfamiliar with how USAA calculates account interest or the order in which USAA applies payments to accounts. After hours of phone calls, I got no clear explanation on how the interest was derived on my statement or would be calculated on future statements. 
I believe the correct promotional balance transfer amountthe amount not subject to interest during the promotional period as of XX/XX/XXXX, should be my current balance of {$9300.00} ( {$10000.00} minus all payments made above purchases ).

I asked USAA to make this correction as soon as possible and respond in writing. 

I mailed a letter regarding this matter to USAA ( USAA Credit Card Services,  XXXX. XXXX, XXXX XXXX, TX XXXX ) on XX/XX/XXXX. I received a phone call from USAA on XX/XX/XXXX where I again asked for a written response regarding the disputed interest. To date I have not received any written response. 

My XX/XX/XXXX statement shows interest charges of {$17.00} even though no purchases were made during the billing cycle. This interest is only on previous purchases that are apparently accruing interest because my payments were applied to the 0 % APR convenience check instead of the new purchases that were subject to a higher interest rate. 

I called USAA on XX/XX/XXXX ( approx. XXXX Eastern ). " XXXX '', the representative said that balances and interest were not split ( despite my statement splitting balances and interest ) and that this is just what happens with this 'type of program '. She claimed that 'highest APR balance ' meant 'oldest balance ', even when I explained how that would not be true in this case. She said that she didn't see my letter and I would have not gotten a response anyway because there was " no bank error ''. Overall, I felt she was very rude, often speaking over me. 

Even though I believe that the interest calculation is wrong, USAA 's cardholder agreement also says that the first {$50.00} of the claimed 'error ' is waived when they don't process complaints correctly, pg. 21 ( like not responding to charge dispute letters within 30 days ). Even if XX/XX/XXXX is the earliest they processed my dispute letter, we are quickly approaching that mark.

Company public response: Company believes complaint represents an opportunity for improvement to better serve consumers
Company response to consumer: Closed with monetary relief