Consumer complaint received 2023-05-24
Company: UNITED SERVICES AUTOMOBILE ASSOCIATION
State: CA
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:
Dollar amount: Its hard to say because I think USAA misapplied a series of excess payments and has then bungled refunds and created transaction disputes I did not ask. The way USAA resolved the disputes it filed with itself (that I did not ask for or directly initiate) has led to additional issues where incorrect APRs are being applied yet again.  The material amount I was owed at a minimum is a returned payment of $XXXX  (minus the minimum payment of ~$XXXX) with a 5% annualized interest rate dating from XXXX. This was before USAA disputed transactions with itself and incurred additional interest and finance charges on my behalf. Im not disputing any specific transactions per se, but rather USAAs mishandling of my payments as a whole.

Problem:
I tried to take advantage of a 0% APR balance transfer promotion with 3% balance transfer fee from USAA. USAA deceptively and unfairly listed my balance transfer fees online at usaa.com as having posted on XXXX with the description BALANCE TRANSFER FEE. You can confirm this on my billing statement ending on XXXX. However, when I made excess payments that posted on XXXX and XXXX, none of those excess payments were applied to the fees. USAA claims that these fees are not truly assessed until the billing period ends. This meant that I essentially made early payments for nothing. I still had the full amount of the balance transfer fees in my minimum payment that was due for the period. Although USAA claims this is clearly outlined in their credit card agreement, it took over 8 hours on the phone with various USAA representatives for someone to be able to mention the part of the agreement that was germane (https://content.usaa.comXXXXXXXX XXXX XXXX XXXX XXXX). Most of the representatives either did not understand the application order of excess payments as outlined by the CFPB here https://www.consumerfinance.govXXXXrules-policy/regulations/1026/53/#53-b-Interp-3-iii-D or were confused about how USAA applied the fees. If even members of the resolution team struggle to understand USAAs deceptive billing practices, how can consumers be expected to understand them?


Below is me outlining how a reasonable consumer might have interpreted the order of application of excess payments given that USAA stated explicitly that balance transfer fees posted on dates prior to the statement closing date. I wrote this before XXXX.

If you look at the statement closing on XXXX, you can see that I made excess payments on XXXX and XXXX The balance on the statement closing on XXXX was $XXXX. I made payments of $XXXX for the statement that closed on XXXX. That means I made $XXXX of excess payments. I intended those excess payments to be applied to my 3% balance transfer fees which totaled $XXXX. Here is a link to the Consumer Financial Protection Bureau explaining how excess payments should be applied https://www.consumerfinance.gov/rules-policy/regulations/1026/53/#53-b-Interp-3-iii-D. This link basically says excess payments are applied to balances that have the highest APR first (after things in excess of the minimum payment). Some people on the USAA support team seem to think that the balance transfer fees totaling $XXXX have an APR of 0%. If that is true, please confirm it in writing so I can delay my payments of them.

None of my excess payments were applied to any of these balance transfer fees even though some of them posted on XXXX, before my excess payments posted. I know this is true because on the XXXX statement, the minimum payment is $XXXX. This is $XXXX  + 1% of the new balance ($XXXX). Because USAA misapplied the payments, I made an additional $XXXX payment that posted on XXXX I did this because I was worried that I was somehow beginning to accrue interest on the $XXXX I believe this $XXXX (minus the minimum payment of ~$XXXX) should be returned to me with interest. I would have put this $XXXX  into a 5% annualized return savings certificate had USAA not tricked me. If I am correct, I would bet USAA has been misapplying excess payments and abusing many customers who have all been materially damaged. I also initiated my 2nd round of balance transfers on XXXX (the ones that posted on XXXX  and XXXX which is why I made the excess payment of $XXXX on XXXX.

I have spent over 8 hours on the phone with USAA customer support people who are unable to articulate why I am wrong. I actually spent over 4 hours consecutively speaking to a XXXX  on the member response team (case number XXXX) about this around XXXX. I was supposed to get a call back explaining the resolution of the case. I received no follow up and had to call USAA myself on XXXX The supposed resolution as described to me today was not a statement on whether or not I was correct about the order of payment, but some muddled statement about how payments could not be targeted to specific transactions. It was described so poorly it was hard to tell but it clearly wasnt a real answer. It is ridiculous that USAA is unable to get a resolution on something so clear. My material damages are at least refunding the additional $XXXX (minus the minimum payment of ~$XXXX) I paid plus a 5% annual interest rate dating back to XXXX. Can I also be compensated for all the time Ive had to spend on the phone?

If my excess payments were applied to the fees, why was my minimum payment $XXXX? If the excess payments were applied to the balance transfer amount correctly, please explain this in writing because I think that would conflict with the CFPB rule I cited earlier. I would like the resolution of this query in writing after someone discusses it with me on the phone at XXXX XXXX XXXX.

On XXXX, I spoke with someone at USAA who pointed me to the credit card agreement https://content.usaa.com/XXXX XXXX XXXX XXXX XXXX which says the minimum payment due includes all the fees and some other stuff. As it was explained to me, the fees arent truly assessed (even though USAA says they posted) until the statement closes. By this logic, if I had paid the full balance due plus the fees so my new balance was $XXXX, I would still owe the full amount of fees in the minimum payment??? So if I had made an additional payment of $XXXX  on say XXXX I would still owe $XXXX in fees for the minimum payment for the period ending on XXXX? Does that make sense to anyone? I said this practice of posting but not assessing fees was deceptive and I thought it was unfair given that USAA.com explicitly says BALANCE TRANSFER FEES posted on XXXX. Should I have reasonably known that even though BALANCE TRANSFER FEES posted to my account, no fees had actually been assessed yet?


Updated on XXXX
I spoke with a XXXX on XXXX who was extremely helpful and agreed that USAA made the process confusing. In particular, he agreed that USAA was basically making me waste a payment by not letting my excess payments be applied to fees that had posted to my account but werent assessed until the end of the payment period. He made a case for me (#XXXX). The result of the payment research requests seemed to be that I was refunded $XXXX. Im not sure why the $XXXX was refunded. I disagree with that being the correct outcome. I never received a call back about these results. I still think these results are incorrect. But even worse, USAA completely incorrectly handled the $XXXX refund. I ended up with an additional $XXXX finance charge on XXXX which has been completely unexplained. I also had $XXXX added back to my balance (which is fair enough) but it was added as a regular purchase, subject to a 16.65% interest rate. And because I have a balance transfer, this money immediately started accruing interest. So I received a $XXXX interest charge on XXXX which I just saw on XXXX. Unbelievable. This $XXXX should obviously be a part of the 0% balance transfer. I dont know how USAA manages to continue handling this balance transfer so poorly.

I am currently speaking with an XXXX  at USAA on XXXX. She is waiving the $XXXX  interest charge. But there is still the outstanding issue that the $XXXX (technically $XXXX on my statement after payments I made were applied) is subject to the wrong APR. Im not even sure how this affects the minimum payment that I was supposed to make. Am supposed to make? And the errors just keep on compounding because I dont find out about things posting until my statement closes. But guess what? It wouldnt even matter because if I tried to make early payments, maybe USAA would claim the fees/interest charges hadnt posted and I would be falling into the same consumer fraud trap that I had to complain about in the first place.

I just sent this complaint into USAAs Credit Card Services Address via the mail. I am also filing a CFPB complaint.

I wont consider this issue resolved until someone speaks with me on the phone about why I am either correct or incorrect, or emails me saying I am correct, or mails me a check for $XXXX  saying whatever they want. Ive spent over 11 hours on the phone with USAA and USAA either keeps on creating more errors or fails to notify me of any resolutions or explain any resolutions adequately.

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