never trust a credit card company…

March 11, 2014 1:16pm
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So I thought that the whole Credit Card Accountability Act of a few years ago was supposed to make credit card terms more upfront and favorable for consumers, and in a lot of ways it has.

Except for this one…

(b) Application of payments.—
(1) In general.—Upon receipt of a payment from a cardholder, the card issuer shall apply amounts in excess of the minimum payment amount first to the card balance bearing the highest rate of interest, and then to each successive balance bearing the next highest rate of interest, until the payment is exhausted.

This is great if you’re making more than your minimum payments, but what if you’re not … or maybe at best you’re making very slight payments over your minimums. Silly me, I just assumed that the same type of logic would apply when applying the actual minimum payment to one’s balances as well, but at least with my bank, Wells Fargo, in fact it’s actually the exact opposite…

Generally, we will apply your Minimum Payment first to lower APR balances (such as Purchases) before balances with higher APRs (such as Cash Advances). Payments made in excess of the Minimum Payment will be applied to balances with higher APRs first before balances with lower ones.

Discovered this when considering a balance transfer option and I wanted to review the current balances on the account in question. Right now this account has three balances – Purchases, Cash Advance, and a Promotional Balance with a really awesome 3.25% variable rate for life! The thing is, I couldn’t help but notice that my promo balance has been rapidly going down while my purchase balance is going up, and granted I have occasionally been using this card for purchases, however if my payments were being applied to the highest APRs first, that wouldn’t be an issue.

I think the most damning element, however, is the Cash Advance because as far as I can tell, apparently I took out that out back in October 2012 (no idea what for, as I’ve only done one maybe 3 times in my life). The interest rate on that fucker is a killer 21.15%, and the problem is that since this card hasn’t really been a priority for extra payments, that thing has just been left to linger for the last 19 months, and even at a paltry $2.50/month in interest, that’s nearly $50 in interest for an advance that was something like $150 almost two years ago, simply because the bank’s repayment terms prioritize in their own favor instead of mine.

…which yeah,  yeah, they’re a business, but the aforementioned act was kind of intended to tip the scales back in the consumers’ favor after predatory lending practices and an unfair lack of disclosures, and I don’t entirely think that I’m out of school for finding it confusing that they literally use opposite repayment terms depending on whether you’re just paying your minimums or going above and beyond. I mean, I suppose being forced to spell it out on my statement that it will take 40 years of paying just my minimums to payoff my card was a good start, but consistent repayment terms would actually make a dent in that number far more than just education will.

I guess I need to give Wells Fargo the extra $150 this month just to make that stupid cash advance go away – on their own terms 😡

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