Consumer complaint received 2023-05-28
Company: DISCOVER BANK
State: MA
Product: Credit card or prepaid card
Sub-product: General-purpose credit card or charge card
Issue: Other features, terms, or problems
Sub-issue: Other problem

Complaint:
Discover Card is refusing to provide me with an accounting of how they apply my payments, and is intentionally avoiding transparency in their handling of the funds I am paying them. 

Discover accepted several balance transfers from me over the past few years. Several times ( XXXX in the last 90 days ), I have called Discover Card Customer Service in an attempt to get information about how they are applying my payments to the different balance transfers currently on the card. They assert that nobody can provide that information, because it is an algorithm that assigns the funds ( which is absurd - people write algorithms and someone there knows how it works ). The real problem, from where I am sitting, is that they seem to be hiding behind a phony technical challenge to avoid customers finding out that their algorithm does not follow the description given to me by customer service of how the payments will be allocated. 

They claim to have a payment application process as follows : the minimum payment goes to the balance with the lowest interest rate. They further claim that everything over the minimum payment is then applied to the highest interest rate balance, then to the next highest, and if more than XXXX balance is at the same interest rate, they will apply any remaining funds to the balance transfer that will expire first. This is not how the math breaks down on my actual statements. 

Example 1 : XXXX of the balance transfers had an introductory period that ran out when there was still a small balance. Per my contract, the balance was transferred to the current XXXX XXXX the card has. I have no issue with that. However, for XXXX months in a row, I paid much more than would have been required to pay off the balance that was at the XXXX XXXX. Nevertheless, every time a new statement was generated there was a small amount of " trailing '' interest that they had not paid off. The reason I noticed this was because it was in opposition to what Discover had told me would happen. Each month a tiny balance was still left under the XXXX XXXX - again, a much higher rate than any of the balance transfer interest rates ( we are talking month after month balances as small as {$1.00} and eventually {$.00} stuck at that XXXX XXXX ). I do not use the card for purchases, so this balance can not be left from a purchase- it is left from the small balance transfer whose intro rate ran out and so it was moved to the XXXX XXXX. 

Example 2 : Another balance on the card is at a 6.99 % interest rate. Discover customer service itself told me that if I paid an amount in excess of both the balance on the purchase rate, and the balance on the next highest interest rate, and the balance on the next highest interest rate after that one, I would have paid off all the balances that were due before XXXX, XXXX. I did the math and anything over {$10000.00} would have covered all of those balances, so that is what I paid. However, on the next statement I still had balances at ALL those interest rates. 

Unfortunately, I have more examples of this. Yesterday, I spoke with someone fairly high up at Discover. It became pretty evident to me that she was not only familiar with this issue, but familiar enough with it have a ready-made " nice '' thing to do in hopes I would be quiet and go away- she removed all of the interest from my last month 's bill. She could not, however, tell me anything about the mysterious algorithm, and gave no response when I asked her why the real-world payment application did not match her explanation ( and all the Discover Customer Service Rep 's explanations ) about how customer funds are allocated to balances.

My particular story is not very dramatic, and I am not here to complain about a few pennies in interest. I am here to complain that it can't possibly be ok for a major credit card company to refuse to tell you how it allocated past payments. In addition, considering how many people probably have Discover Cards, my few pennies could scale up to real money if they are doing this to everyone. It is deceptive, misleading, unfair, opaque, and insulting. If it isn't illegal yet, I hope it is soon.

Company response to consumer: Closed with explanation