Consumer complaint received 2021-05-06
Company: AMERICAN EXPRESS COMPANY
State: TX
Product: Credit card or prepaid card
Sub-product: General-purpose credit card or charge card
Issue: Fees or interest
Sub-issue: Problem with fees

Complaint:
Well I have some doubts about how minimum payments and over the minimum payment amounts are been applied to the balances on a Credit card account with American express, and after having a chat with a representative today I still have more doubts if they are doing the right as the federal regulations says if any, As the Credit card Act. 

I have three different Balances on this account, One is for purchases with a 15.99 % APr Other for promotional period Purchases and 15.99 % APP and a Cash Advance balance with a 24.99 % APR. 

It seems to me that Federal rules are explained like in the next article ; " '' '' '' '' '' '' '' '' '' Basic rules of credit card payment allocation It would be nice, in most cases, if the law required that 100 % of your payment go toward your most expensive debt. Thats exactly what an early draft of the Credit Card Act proposed. But the version that eventually became law gives credit card companies a little more leeway in divvying up your payments. 

Generally, your issuer divides your credit card payment into two parts : The minimum payment is the portion of your balance youre contractually obligated to pay each month. The issuer can apply the minimum to whichever balance it wants. Often, this means the minimum goes toward the lowest-interest balance, rather than your most expensive one. 

The excess payment is everything you pay above the minimum. The Card Act requires issuers to apply this part of your payment to the highest-interest balance first. After that, the remainder generally must be applied to the other balances in descending order, based on the applicable annual percentage rate, according to the law. 

How does paying off a credit card work in practice? Lets say you have a card with the following balances : {$640.00} of balance transfers at 0 % APR {$60.00} of cash advances at 25 % APR {$300.00} of purchases at 15 % APR Suppose your minimum payment was {$25.00}, but you opted to pay {$100.00} instead. Heres how your issuer might allocate your payment : {$25.00}, the minimum payment, might go to balance transfers, since it has the lowest APR. 

{$60.00} might go to cash advances, which has the highest APR. 

{$15.00} might go purchases, which has the second-highest APR. '' '' '' '' '' '' '' '' '' '' '' Thank you for reading, But I noticed that American Express is not aplying anything from my payments to the balance with HIGH APR. 
I am talking about the Cash Advance APR with 24.99 % and worst,,,,,, that balance is increasing month by month even when I am not doing any more purchases or cash advances, Last month I made an online payment for the minimum payment amount, and I sent a separate payment for {$65.00} by regular mail and wrote over the check asking that the full amount should be applied to the Cash advance balance, or the 24.99 % APR balance, and they did not aplied it as I asked. 

Then Today,,,,, After talking with the Bank representative with nick name XXXX on the American express chat they told me that they do not follow that rule, they follow this rule instead : " '' '' '' '' '' UPON CHECKING WE DO HAVE PAYMENT HIERARCHY OF : # 1 PROMOTIONAL BALANCE # 2 XXXX  PURCHASE # 3 XXXX CASH TO FREE UP YOUR CASH ADVANCE LIMIT YOU NEED TO SETTLE THE FULL OUTSTANDING BALANCE, BECAUSE AS PER PAYMENT HIERARCHY XXXX  PURCHASE WILL BE SETTED FIRST BEFORE THE STANDAR CASH. '' '' '' '' '' '' '' '' '' '' '' And that is the reason the cash advance balance is increasing by the time they said. 

They also said that we as customer we do not have the right to choose wich balance we wish our extra payments be applied, so they took my extra payment and aplied it based on the bank rules, ( note that clearly wrote on the check that full amount must be applied to the cash advance balance and they did'nt. 


And that is all my confussion, Are they doing the right? 
or Did I lost the right to ask them where my payments should go? after making their minimum payment in separate? 

Thank you for all.

Company response to consumer: Closed with explanation