Dakota Beacon

Making a Difference – It Happens!

By Lynn Bergman

Many of you have probably experienced the belligerence of your credit card provider in requiring you pay off your lowest interest loans (usually a promotional rate) before the higher interest ones.

I filed a formal complaint with the Controller of the Currency, Administrator of National Banks, Customer Assistance Group (Case # 00877438) in which I urged the regulator to prohibit banks from placing terms in banking agreements that deny a person’s basic right to PAY OFF THE HIGHEST INTEREST LOAN FIRST.

The letter response was received on August 17, 2009 stating that “Please note that there are no federal regulations which prevent the bank from allocating payments in this manner.” Although no remedy was promised, I found out today (in a letter from my credit card provider) that the Credit Card Accountability, Responsibility and Disclosure (CARD) Act, which goes into affect in February 2010 will address my compliant!

As Bank of America says in their letter, “Any amounts you pay over the minimum payment will now be used to pay down balances with the highest Annual Percentage Rate. Here’s how it works. Let’s say you have a credit card account with two balances. The first balance has a promotional Annual Percentage Rate of 4.99%. The second balance has an Annual Percentage Rate of 14.99%. If your minimum payment is $100 and you pay $125, the extra $25 is applied to the higher rate balance.”

This is a classic example of NEEDED REGULATION that simply enforces a commonly accepted right of borrowers, namely the right to themselves choose to pay off higher interest rate loans first. I’m not taking credit (no pun intended) for the new law, but who knows if it would have included this provision had I not formally complained?

Score: Lynn Bergman 1 Bank of America 0