Consumer complaint received 2026-01-23 00:00:00
Product: Credit card — General-purpose credit card or charge card
Issue: Fees or interest — Charged too much interest
Company: DISCOVER BANK
State: MA

Complaint narrative:
Subject : Systematic Violation of CARD Act Payment Allocation Rules ( 12 CFR 1026.53 ) Discover Bank Description of Incident : I am filing this complaint against Discover Bank for a systematic and ongoing failure to comply with 12 CFR 1026.53 ( Allocation of Payments ). Over the XXXX calendar years, Discover has repeatedly misallocated payments made in excess of my minimum periodic payment. 

The Violation : Federal law requires that all payments in excess of the minimum be applied to the balance with the highest APR first. Discover has instead applied thousands of dollars to my 0.00 % APR promotional balances while I carried active balances at significantly higher rates ( specifically XXXX  % and XXXX % + ). 

Evidence of Non-Compliance : Admission of Illegal Policy : On XX/XX/XXXX, a Discover agent ( " XXXX '' ) stated in a recorded chat that my XXXX % APR balance " does not get the entire amount '' because it has no expiration date. This is a direct admission of an internal policy that violates the CARD Act, which provides no such exception. 

XXXX Misallocations : In XX/XX/XXXX a total {$7800.00} excess funds were moved to 0 % buckets despite active interest-bearing balances, resulting in an estimated interest overcharge of $ XXXX. 

XXXX Misallocations : A total of {$26000.00} in excess payments were misallocated across XXXX months, resulting in an estimated interest overcharge of $ XXXX. 

Period, Total Misallocated, Interest to be Refunded XXXX Subtotal, {$7800.00}, $ XXXX XXXX Subtotal, {$26000.00}, $ XXXX GRAND TOTAL, {$34000.00}, $ XXXX Total Misallocated, XXXX dollars. 
Estimated Interest Overcharge, ~ {$1200.00} dollars. 

The details of misallocation and accrued interest per month is provided at the bottom of this document. 

Company Response to my complaint : I formally disputed these charges with Discover in XX/XX/XXXX. Their response was a generic dismissal that failed to address the specific regulatory citation ( 12 CFR 1026.53 ) or the evidence from their own agent 's transcript. 

Desired Resolution : Manual Reallocation : Retroactively apply all {$34000.00} in misallocated funds from XXXX to the highest APR balances. 

Interest Refund : Credit my account for all excess interest charged due to these illegal allocations ( Est. ~ {$1200.00} total ). 

Systemic Fix : Correct the account algorithm to ensure future excess payments prioritize high-interest balances as required by law. 

I have attached my monthly statements and a transcript of the chat with the Discover agent confirming this misallocation policy. I also present the summary of misalocated funds and excess interest charged. I am requesting that the CFPB compel Discover Bank to comply with federal law and refund the interest overcharges resulting from their non-compliant payment allocation algorithm. 


Summary of Misallocated Excess Payments since XX/XX/XXXX : XX/XX/XXXX, XXXX dollars extra payment, should have paid XXXX percent APR. 
XX/XX/XXXX, XXXX dollars extra payment, should have paid XXXX percent XXXX. 
XX/XX/XXXX, XXXX dollars extra payment, should have paid XXXX percent XXXX. 
XX/XX/XXXX, XXXX dollars extra payment, should have paid XXXX percent XXXX. 
XX/XX/XXXX, XXXX dollars extra payment, should have paid XXXX percent XXXX. 
XXXX XXXX XXXX  dollars extra payment, should have paid XXXX percent XXXX. 
XX/XX/XXXX, XXXX dollars extra payment, should have paid XXXX percent XXXX. 
XXXX XXXX XXXX dollars extra payment, should have paid XXXX percent XXXX. 
XXXX XXXX XXXX dollars extra payment, should have paid XXXX percent XXXX. 
XXXX XXXX XXXX  dollars extra payment, should have paid XXXX percent XXXX. 

Period, Total Misallocated, Interest to be Refunded XXXX Subtotal, {$7800.00}, $ XXXX XXXX Subtotal, {$26000.00}, $ XXXX GRAND TOTAL, {$34000.00}, $ XXXX Sincerely, XXXX XXXX

Company response to consumer: Closed with explanation