Consumer complaint received 2024-12-19 00:00:00
Product: Credit card — Store credit card
Issue: Advertising and marketing, including promotional offers — Confusing or misleading advertising about the credit card
Company: Bread Financial Holdings, Inc.
State: UT

Complaint narrative:
I have a store card with XXXX ( Comenity Bank ). I use this card for interest free financing and always pay more than my minimum payment to avoid interest charges. 

I have always had issues with the payments being applied to prevent interest or balloon payments. Per the ASD on their website : We apply payments up to the Minimum Payment at our discretion, which may result in balances at lower APRs being paid first and higher interest charges. Payments over the Minimum Payment will be applied in accordance with law.

The minimum payment in XXXX and XXXX was {$160.00}. I paid {$520.00} and {$520.00} respectively. 

I have a promotional plan that expires on XX/XX/XXXX, with an original balance ( in XX/XX/year> ) of {$1000.00}, which would have only require payments of ~ {$94.00} to avoid interest. The deferred interest rate is ~31 % I have a second promotional plan that expires on XX/XX/XXXX with a beginning balance ( in XX/XX/year> ) of XXXX, requiring payments of XXXX to avoid interest. The deferred interest rate is 35.99 % I understand the card act requires institutions to apply any payment above the minimum to the highest interest rate first, but how does this work with deferred interest? In my case XXXX is applying as little as {$8.00} to the plan which would expire first, applying all overage to the longer/highest interest rate plan. If the overage is always applied in this manner, then it will be impossible to pay anything on the expiring plan until the longer plan is paid in full first. This means there is essentially NOT 12 months interest free options on each plan. This also forces consumers to pay very large amounts when they near the end of the program expiration. XXXX will not place minimum payment overages to the expiring plan until the final XXXX months of the promotional period. This is not provided in the XXXX  or on the statement. So, although I have been paying well above my minimum payments, I now have to come up with {$950.00} in XXXX months, because all overages in the last XXXX months have been applied to the newer promotional plan. This isn't the first time this has happened to me, but it is the first time that the allocations were as low as {$8.00}. 

I feel this is a UDAAP violation and misleading advertising. Consumers ARE NOT receiving interest free financing for the period of time provided if they have more than one plan. This method of allocation is extremely confusing to me, and I work at a financial institution. It is also not disclosed how payments will be applied ( on the statement or XXXX  ), I only know because I reached out to Comenity. 

I don't expect Comenity to read my mind, but if I am paying {$520.00} & {$520.00} and there is a program expiring FIRST, I should be allowed to allocate the funds as long as the minimum payments are made on each plan. Otherwise, I will need to pay BOTH programs off in less than 12 months which is misleading. 

I was previously able to get them to reallocate payments, but today they stated that they can not.

Company response to consumer: Closed with non-monetary relief