Consumer complaint received 2024-07-10
Product: Credit card — General-purpose credit card or charge card
Issue: Fees or interest — Charged too much interest
Company: Bread Financial Holdings, Inc. (IL)

This complaint regards the " XXXX '' card for XXXX XXXX XXXX XXXX XXXX XXXX, run by Comenity. 
As a promotion for the card, they offer XXXX purchase options at checkout- the first being XXXX month deferred XXXX XXXX  interest, and the second being a regular purchase but with the sales tax being covered. 

After signing up for the card in XXXX, I made a {$1100.00} purchase under the XXXX XXXX XXXX month XXXX option. I immediately set up monthly automatic {$150.00} payments, which I had calculated would more than pay off that balance in full within the XXXX month window. 
These went through for several months as planned, and I was not charged interest, as advertised. 

However, a few months later in XXXX, I made another purchase for {$1000.00} under their regular purchase terms, having it cover the sales tax as opposed to the XXXX XXXX XXXX XXXX XXXX. Immediately after, I made a manual payment for that amount, with my intention being that it would cover that purchase. However, unbeknownst to me, Comenity applied that {$1000.00} to the remaining balance of my item purchased under the XXXX XXXX financing, wiping out the remaining " promo '' balance on the initial {$1100.00} purchase made several months prior. 
Because my XXXX XXXX promo balance was then apparently cleared, I then left with a balance from the regular purchases I made after from that point on, which began to accrue interest without my knowledge as they carried over into the following months. 

Anybody looking at my transaction history and payments would obviously be able to discern that my intention was to pay off the individual purchases in real time as I made them. I bought an item for {$1000.00}, then made a {$1000.00} payment. Bought an item for {$210.00}, then made a {$210.00} payment. I bought an {$89.00} item, then made an {$89.00} manual payment, etc. the cycle continued. Yet it turns out they just arbitrarily decided that these manual payments were to be applied to my initial promo apr purchase, and I was to be left with a balance on the items I intended to pay for manually. 

To clarify, their site and billing portal offer no option for the customer to specify to which pools of principle balance the payments are being applied to- the items purchased under XXXX XXXX XXXX XXXX XXXX promo financing, or items purchased under regular, traditional terms. They say that a customer has the option to call to specify towards which balance their payments go, but clearly they don't expect anybody to actually know this. 

It it my understanding that the following is true- " the XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX requires credit card companies to apply payments over the minimum balance to the highest interest rate first. This prevents companies from applying payments to lower-rate balances, which can increase the amount of the balance that's charged a higher interest rate. '' Under this XXXX XXXX, does Comenity not have an obligation to apply my additional manual payments ( which far exceed the minimum payment ) to the non promo financing/traditional purchases first, which have an exorbitantly high apr of XXXX XXXX? This was my intention, and it is my belief that their payment system is set up in a way that is intentionally deceptive, hoping that customers such as myself will not notice. The interest charged to me was a small amount, but I have a near perfect XXXX XXXX and have never carried a balance whatsoever before getting wrapped up in this XXXX XXXX XXXX apr nonsense. I have filed a dispute with them, and am filing a complaint here for what I believe are unfair, intentionally opaque business practices.