Consumer complaint received 2024-10-09 00:00:00
Product: Credit card — General-purpose credit card or charge card
Issue: Fees or interest — Problem with fees
Company: PENTAGON FEDERAL CREDIT UNION
State: TX

Complaint narrative:
I am writing to file a formal complaint regarding PenFed Credit Unions handling of my balance transfers and payment allocation. I believe the practices they have employed are unfair and have resulted in unnecessary and unexpected financial penalties. 

In XXXX, I initiated a balance transfer with PenFed, which was set to expire on XX/XX/XXXX. Shortly afterward, I initiated a second balance transfer, with an expiration date of XX/XX/year>. I have been making consistent payments on my account, including additional payments that exceeded the minimum requirements, with the clear intention of paying off the balance transfer that was due to expire first, by the XX/XX/XXXX deadline. 

However, I have now been informed that PenFed has allocated my payments across both balance transfers, instead of applying them to the first balance transfer, which was my primary goal. I have not made any purchases on the accountmy only activity has been related to these balance transfers. Despite my payments, the first balance transfer expired, and PenFed has now applied an 18 % interest rate to the remaining balance. 

When I contacted PenFeds customer service for assistance, I was told that there is no option to allocate my payments to a specific balance transfer, which I find deeply concerning and unfair. My intention was to avoid accruing interest charges by paying off the first balance transfer before its expiration, yet PenFeds payment allocation system has essentially prevented me from doing so, despite my timely payments.

I feel that PenFeds actions have boxed me in as a consumer, limiting my ability to manage my finances effectively. I believe it is unreasonable for them to allow multiple balance transfers with different expiration dates but offer no way to direct payments toward the most urgent balance. In secured products like mortgages, consumers have the option to allocate payments towards principal balances, but this flexibility appears to be absent in revolving credit accounts, which has led to these unwarranted finance charges. 

I have already reached out to PenFed, requesting that they waive the accrued finance charges or allow me to make an additional payment to cover the difference and avoid further charges. However, they have refused to provide any assistance or solutions, leaving me without recourse.

I am seeking the CFPBs assistance in holding PenFed accountable for this unfair practice and requesting a review of the payment allocation policies that led to this situation. I ask that PenFed be required to waive the accrued interest charges and allow me to allocate my payments as intended, as well as review their payment allocation system to prevent this from happening to other consumers in the future. 

Thank you for your attention to this matter. I look forward to your guidance and any resolution you can provide.

Company public response: Company has responded to the consumer and the CFPB and chooses not to provide a public response
Company response to consumer: Closed with explanation