Consumer complaint received 2018-05-15
Product: Credit card or prepaid card — Store credit card
Issue: Fees or interest — Charged too much interest
Company: Bread Financial Holdings, Inc. (NY)

This is a reopening of previous complaint # XXXX submitted XX/XX/XXXX. 

MY INITIAL COMPLAINT ( XX/XX/XXXX ) : My deferred interest payment plan with the XXXX XXXX credit card issued by XXXX XXXX expires on XX/XX/XXXX. I mailed out a check on XX/XX/XXXX to pay my remaining balance of {$550.00} on the account. On XX/XX/XXXX, a finance charge of {$320.00} was added to my account with no notice that my payment was not received. I did not discover this until XX/XX/XXXX when I logged into my account. I paid the {$550.00} balance immediately using ACH and reached out to Customer Service multiple times to inquire on why I was charged 58.4 % of interest ( {$320.00} on {$550.00} ) without any notification. The APR on the account is only 28.24 %. 

COMPANY RESPONSE ( XX/XX/XXXX ) : Under the terms of this promotional plan, interest on a purchase is deferred until the plan expires. This means that interest on a purchase is accruing monthly from the original purchase date, but was not being applied to the account. In order to keep the accrued finance charges from being applied to the account, the entire promotional purchase amount needed to be paid in full by the promotional plans expiration date. The promotional purchase was not paid in full by the expiration date ; therefore, the accrued interest was applied to the account. The details of the promotional plan, as well as the expiration date, were present on each monthly billing statement. We respectfully decline to remove any finance charges, as we find the balance to be valid. 

MY FOLLOW-UP RESPONSE ( XX/XX/XXXX ) : I would like to respectfully point out that this specific term of the promotional plan technically violates more than one provision of the XXXX Credit CARD Act. 

According to Section 102 ( a ) of the Act, which states : " a creditor may not impose any finance charge on a credit card account under an open end consumer credit plan as a result of the loss of any time period provided by the creditor within which the obligor may repay any portion of the credit extended without incurring a finance charge, with respect to ( A ) any balances for days in billing cycles that precede the most recent billing cycle. '' This provision in the law prohibits any payment plan that impose a finance charge based on balances from prior billing cycles if the consumer does not repay the entire balance within the specified time period ( which would qualify as the loss of any time period within which the consumer may repay a balance without incurring a finance charge ). 

Another provision that this payment plan violates is Section101 ( b ). The Section, which is codified at 15 U.S.C. 1666i-1, prohibits the retroactive application of an interest rate increase. Charging a retroactive interest on a balance that has already been paid off is effectively an increase in interest rate of the outstanding balance. 

I also disagree that the details of this payment plan has been sufficiently explained in my monthly billing statement. According to my XX/XX/XXXX statement, my " balance subject to interest rate '' was {$740.00}, listed next to " APR 28.24 % ''. One would then reasonably assume the interest assessed ( had the outstanding balance not been paid in full ) would be $ XXXX*28.24 % *Number of Days Outstanding/365. Nowhere on the statement had it explicitly informed me that I will be hit with $ 300+ in retroactive interest charge based on the original balance of $ 1500+. 

Based on the above reasons, I respectfully ask again that the finance charge be removed. Attached please see the aforementioned CARD ACT publication and my XX/XX/XXXX Billing Statement.