- Report: #163785
Complaint Review: DISCOVER CARD - Salt Lake City Utah
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DISCOVER CARD
P.O. Box 30395 Salt Lake City, 84130 Utah, U.S.A.
Phone:
800-347-2683
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DISCOVER CARD Payments apply to Balance Transfer first, then other charges. This means DON'T USE CARD AFTER MAKING A BALANCE TRANSFER. They don't tell you this up front. ripoff Salt Lake City Utah
Background: Called Discover to cancel card; hadn't used it in years. Previously used it only at Costco, but later Costco only accepted cards from AmEx. We moved, and are now closer to Sams Club. Gal at DC let me know, offered $20 to keep card. I said OK because I could use it at Sams Club.
During conversation, she talked about Balance Transfer. My husband and I pay credit cards off each month and don't normally carry a balance (because we DON'T PAY FINANCE CHARGES). However, we just bought a new house, had charged $12K of furniture on another card, and were going to sell some Disney stock to make the payment. She said we could get 0% rate for 6 months, and only had to pay a $60 transfer fee. I made it clear that I DON'T PAY FINANCE CHARGES but thought the $60 transfer fee would be reasonable because the stock had taken a recent dip and I felt it would recover in the next six months (a gamble, I know, but a reasonable one I think).
I started using the DC; the balance transfer hit, and I continued using the card. Last month I had charged around $800 so I sent $1000 as a payment to be sure to cover the $800. Well, I just got my new statement and was charged $23 in finance charge. I phoned them, and they said that the $1K payment went towards the balance with the LOWEST INTEREST RATE (the balance transfer); in other words, in order to NOT pay any finance charges, I must now pay off the balance transfer as well as regular charges.
I WAS NOT TOLD THIS. When I called, both people I spoke to said "it's in your cardholder agreement." I looked at everything I had received, and found in my balance transfer confirmation letter, received *AFTER* THE BALANCE TRANSFER HAD BEEN MADE AND OTHER CHARGES MADE, a paragraph telling the customer that payments are applied to lowest APRs first.
I made it VERY clear to the person selling me this balance transfer that I DON'T PAY FINANCE CHARGES and she did not tell me that if I use the card after the balance transfer hit that the entire benefit of the 0% financing is lost. THIS IS RIDICULOUS. If I had known this, I would have put my card in the drawer for 6 months and not used it. That is the only way to avoid this scam, and I truly believe this is a major league SCAM.
So now I'm out not only the $60 transfer fee, the $23 plus whatever other finance charges they end up charging me, but I now have to scramble to sell the stock. If they do not rectify this, then I will absolutely be canceling this card. Even though I pay my balance in full each month, I use my credit cards each month and they earn (what is it, three percent?) of the charges they make from the vendors. This is not a wise move on their part. I am just as happy to use my Visa or Mastercard when making my monthly purchases (a minimum of $2K per month).
I will update this post if/when any progress is made.
Susan
Kenosha, Wisconsin
U.S.A.
During conversation, she talked about Balance Transfer. My husband and I pay credit cards off each month and don't normally carry a balance (because we DON'T PAY FINANCE CHARGES). However, we just bought a new house, had charged $12K of furniture on another card, and were going to sell some Disney stock to make the payment. She said we could get 0% rate for 6 months, and only had to pay a $60 transfer fee. I made it clear that I DON'T PAY FINANCE CHARGES but thought the $60 transfer fee would be reasonable because the stock had taken a recent dip and I felt it would recover in the next six months (a gamble, I know, but a reasonable one I think).
I started using the DC; the balance transfer hit, and I continued using the card. Last month I had charged around $800 so I sent $1000 as a payment to be sure to cover the $800. Well, I just got my new statement and was charged $23 in finance charge. I phoned them, and they said that the $1K payment went towards the balance with the LOWEST INTEREST RATE (the balance transfer); in other words, in order to NOT pay any finance charges, I must now pay off the balance transfer as well as regular charges.
I WAS NOT TOLD THIS. When I called, both people I spoke to said "it's in your cardholder agreement." I looked at everything I had received, and found in my balance transfer confirmation letter, received *AFTER* THE BALANCE TRANSFER HAD BEEN MADE AND OTHER CHARGES MADE, a paragraph telling the customer that payments are applied to lowest APRs first.
I made it VERY clear to the person selling me this balance transfer that I DON'T PAY FINANCE CHARGES and she did not tell me that if I use the card after the balance transfer hit that the entire benefit of the 0% financing is lost. THIS IS RIDICULOUS. If I had known this, I would have put my card in the drawer for 6 months and not used it. That is the only way to avoid this scam, and I truly believe this is a major league SCAM.
So now I'm out not only the $60 transfer fee, the $23 plus whatever other finance charges they end up charging me, but I now have to scramble to sell the stock. If they do not rectify this, then I will absolutely be canceling this card. Even though I pay my balance in full each month, I use my credit cards each month and they earn (what is it, three percent?) of the charges they make from the vendors. This is not a wise move on their part. I am just as happy to use my Visa or Mastercard when making my monthly purchases (a minimum of $2K per month).
I will update this post if/when any progress is made.
Susan
Kenosha, Wisconsin
U.S.A.
3 Updates & Rebuttals
S
Kenosha,Wisconsin,
U.S.A.
I will concede that SCAM is a harsh word for what DC does, but it is certainly a DECEPTIVE PRACTICE.
#2Author of original report
Sat, December 03, 2005
I filed this Rip-off Report. I will concede that SCAM is a harsh word for what DC does, but it is certainly a DECEPTIVE PRACTICE. You mentioned my looking at the Cardholder Agreement I received when I opened the card. I opened the card in 1986 - which is NINETEEN years ago. While I do not have a copy of the original agreement, I can all but GUARANTEE that they hadn't thought up this deceptive practice back then. Because they did not mail the information until AFTER I had already made the secondary purchases, they need to reimburse me for the finance charges. I still feel adamantly that I was purposely deceived, because I had made it clear during the telephone conversation that I DO NOT pay finance charges, and yet the person who signed me up did not advise me of this practice. By the way, here is an update: I cashed in my Disney stock, paid off the Discover Card, and will NEVER again do business with this company. I will be closing the account next week. Discover Card has lost a good customer who never missed a payment. I doubt they will feel the loss, but I will be happy to take my business elsewhere.
Kate
Phoenix,Arizona,
U.S.A.
Not a scam
#3UPDATE Employee
Sun, November 13, 2005
While I would agree that each customer should be reminded of our policies on interest rates and about our payment hierarchy at the time when they do a balance transfer, what happened to you is not a scam. Why isn't it? Because you ALSO got a copy of the Cardmember Agreement when you first got the card. It arrives with every customer's first card for their account and is meant to be read. So I would have to agree with the previous poster that you should simply move your balance off Discover to another account. Although it sounds like you are sufficiently angry that you may never again use our card, I hope that is not the case. We offer so many benefits above and beyond being the sole credit card accepted by Sam's Club stores!
Ken
Randolph,Massachusetts,
U.S.A.
It isn't just Discover
#4Consumer Comment
Tue, November 08, 2005
This is true of every credit card. If they transfer a balance at a low rate, they will ALWAYS apply payment to the low rate. They would be nuts not to. I just looked at an offer I got from Citibank in the mail soliciting me to transfer balances, and it states (in very small print) on the offer itself that this is the case. Since it sounds like you would have good credit, so why not just roll the whole Discover balance onto a new card... and since you now know the rules, you won't have the issue with finance charges?
