Consumer challenges interest charges after accepting balance transfer promotion

Ms. W was a smart credit card user, always making sure to pay off her balance in full each month. She used her cashback card for everything from travel expenses to groceries, and for cash advances. Her bank informed her of a promotional offer to transfer balances from other credit cards to her cashback card at a 0% interest rate for 12 months. This offer represented a significant savings from the usual interest rates of 20.99% on outstanding balances and 21.99% on cash advances.

Despite the 2% balance transfer fee, she decided to take advantage of the bank’s promotion. In May, Ms. W began transferring balances to her cashback card, while continuing to use it for new purchases and cash advances. Ms. W paid off the balances due on her May and June statements, which included the balance transfer fees and the new charges she had made. 

By the end of July, Ms. W had transferred a total of $10,000 under the promotional offer and had paid approximately $200 in balance transfer fees. However, when Ms. W reviewed her July and August statements, it seemed that the bank was charging interest on the transferred balances. Concerned, Ms. W contacted the bank’s customer service team. 

The bank representative assured Ms. W that no interest had been charged on the transferred balances. They explained that her payments were distributed proportionately among her cash advances, new purchases, and transferred balance. This meant that a portion of the new charges remained unpaid, accruing interest each month until the account was fully paid off. 

The representative advised Ms. W that her payments would only be fully applied to new purchases and cash advances after her transferred balance was paid in full. As a goodwill gesture, they agreed to reverse the interest charges that had already been accrued. 

In the months that followed, Ms. W contacted the bank multiple times, insisting that interest was being charged on her transferred balances during the 0% interest promotional period. Each time, the bank reiterated that the interest was applied only to her outstanding purchase balances, not to the transferred balance, and reversed the interest charges as a gesture of goodwill each time. 

In late March, Ms. W formally complained to the bank, requesting reimbursement for all the interest charges related to the balance transfers. The bank conducted a formal review and once again concluded that no interest had been charged on the transferred balances. It reminded Ms. W that it had already reversed $230 in purchase interest as a goodwill gesture.

Before the promotional period ended, Ms. W paid off her transferred balance in full. She then requested reimbursement for the fees, arguing that the promotional offer had been misleading, and she would not have accepted it had she understood the full details. The bank refused her request. 

Believing this to be unfair, Ms. W came to OBSI for help.

Our investigator interviewed Ms. W and representatives from the bank to verify the activity on Ms. W’s account. During the investigation, we also reviewed the bank’s cardholder agreement and the terms and conditions of the balance transfer offer. After a thorough examination, we concluded that the bank had indeed fully disclosed the details of the offer to Ms. W before she accepted it. We found that the bank had applied her payments and charged purchase interest in accordance with the agreement and not charged interest on the transferred balances. 

Given our findings, we had no basis to recommend compensation.