Consumer complaint received 2023-12-14
Company: CITIZENS FINANCIAL GROUP, INC.
State: NY
Product: Credit card
Sub-product: General-purpose credit card or charge card
Issue: Fees or interest
Sub-issue: Problem with fees

Complaint:
Earlier this fall I moved some debt into accounts offering a 0 % promo for a limited term. I noticed on my statements from 2 of the accounts in the same bank that I was being charged interest on the service fees of 19.99 % for one ( {$2.00} on {$150.00} ) and 16.99 % for the other ( {$3.00}. XXXX on {$230.00} ). 

I've made these type of debt moves to lower rate offers a lot over the years, and how it's typically worked is that the transaction service fee is : 1 ) paid in full on the first payment along with the 1st minimum payment, or 2 ) it is held in a separate area and any payments you make that exceed the minimum payment are applied first to the service fee and once that is aid off applied to the principal debt, or 3 ) the service fee is rolled into the amount of principal debt owed. 

I called the bank to find out how to pay off the transaction fee in order to avoid paying the interest on those. I was told, " You can't. '' It was explained to me that the service fee doesn't get paid off until the principal debt gets paid off. There is no viable option for the consumer to pay off the transaction fee prior to the debt being paid off. 

So ... in other words, the bank is holding the transaction fee XXXX and collecting a high rate interest on it for at least the full term of the 0 % promo. This sounds wholly unethical to me and I suspect it might even be against US / XXXX finance law. I've tried to discern the legalese surrounding these transaction fees and whether or not they can be subject to interest charges in the paragraphs in 1026.4 ( c ) but it doesn't seem to specifically address this situation. ( Possible loophole? ) My issues are threefold : 1 ) Is a bank legally allowed to hold a transaction fee XXXX from having any options to be paid off during the term ( s ) of the 0 % promo and beyond?

2 ) There is so much missing information around this. There is no disclosure by the bank about this and my understanding is that anything involving interest rates being applied to funds owed must be disclosed. Plus, unlike other banks, on the statements they do not disclose the 0 % promo end dates, which is inconvenient and ushers in the likelihood that the consumer will lose track of that and end up making at least one payment under the expired promo with the higher interest rate.

3 ) Is it even allowable to charge interest on transaction fees and treat them the same as though they were a credit card purchase? 

I contact the NYS Attorney Generals office by email, and was told to file a formal complaint with them. I did that, and got a response back saying they've sent the complaint to the bank, but advising me to also file a complaint at the federal level as the bank in question is a federally charted financial institution. 

I called, and the representative could find no information about this particular situation and advised me I could file the complaint here on the website.

Company response to consumer: Closed with explanation