Consumer complaint received 2016-04-01
Company: DISCOVER BANK
State: MA
Product: Credit card
Issue: Billing statement

Complaint:
We have a credit card with Discover. We make our minimum payments on time and as a way to pay down our balance sooner, we have been making extra payments. Typically these extra payments were being made on a weekly to bi-weekly basis. The amounts of these extra payments were anywhere from {$5.00} - {$50.00}. We made a payment of {$350.00} recently. That amount covered what I used to purchase things plus extra. Upon checking my account, I noticed that our balance had increased instead of decreasing, so I called. I was told that according to my user agreement, Discover confiscates extra payments and applies them to the minimum balance of the following month due to how 'our billing cycle ' is set up. I called again, got the same answer. I emailed them, and again, they insist that they are going to confiscate these extra payments unless they are paid before the XXXX of each month. Today ( XXXX XXXX ) I called the exec office of Discover. The first person I spoke with hung up on me and the second person gave me the same story about how we agreed to all of this and it has always been that way. Since I do not have a copy of the 2011 Discover user agreement, I ca n't honestly say whether it has 'always been this way ' or not. Basically what Discover is saying is that none of their card holders can be trusted to pay their bills even if Discover has not justifiable reason for treating their customers this way including us. I have read all of Discover 's disclosure pages posted here as well their website and even checked the Federal Reserve 's disclosure page. None of these pages explain this confiscation policy that Discover talks about. If this what users are agreeing to, why is this not posted on their website? People should know how ( or in this case IF ) their money is being applied to their balance. right? 

In order to make these extra payments work as intended, a customer has to XXXX of XXXX things. A ) Pay the extra within the window that it wo n't be confiscated or B ) Pay extra on their minimum payment. Option A pays down balance. Option B may or may not pay down a balance depending on how much is paid. The only way to decrease the balance with Option B would be to pay the minimum plus the interest, plus whatever the extra would be. 

Since Discover is so concerned with minimum payments being made, one would be lead to believe that they would appreciate any extra money that was sent their way. That seems not to be the case. Instead, if a card holder does not know about this confiscation policy, they make not progress paying off their balance if they make the minimum payment with no extra. Sounds like a good money making deal for Discover if I 've ever heard one. 

I have a copy of the Discover user agreement being sent to me. According to their website it will take XXXX30 days to get here. Not that it matters at this point as now I know what the game is. Pay extra in the 5 day window along with the regular minimum payment plus interest. 

I do n't expect anything to become of this complaint, but I do think Discover customers who do pay their bills and send extra payments should know what they are getting into. As mentioned previously, since Discover feels that strongly about this policy, it should be posted in all of their disclosure pages and on their page that explains how payments are applied which includes the extra ones. If they do n't want to post it there, it should be printed on billing statements as there is no mention of this policy there either. All it mentions is paying down higher interest rate balances first. No mention of confiscation of extra payments..

Company response to consumer: Closed with explanation