Dongmei made a purchase under an interest-free promotion for 40 months using her credit card. She later made other purchases on her credit card that weren’t interest free. Dongmei tried to make payments on her interest-bearing purchases, but every time she did, it would reduce the interest-free amount instead.
Dongmei wanted to make sure that she got the full benefit of the 40-month interest free period, and she didn’t want to pay it off early, so she complained to FSCL.
Dispute
Dongmei complained that her repayments were reducing the interest-free amount, rather than her other purchases that weren’t interest free. She felt it was unfair and false advertising because it meant that she didn’t get the full 40-months interest free. She was worried that the same thing was happening to other people.
The lender explained that payments into the credit card were allocated to purchases based on a payment hierarchy, which was set out in their terms and conditions. They said that Dongmei wasn’t waiting until her other purchases showed up on her account statement before she paid, so the money was going straight to the interest free payment. They explained that if she waited for the purchases to show up before making her payments, they would apply her payment to the most recent purchases rather than to the purchase bought with the interest-free amount.
Review
When reviewing the file, we could see that the lender had offered to vary the payments on Dongmei’s account so that the money she paid went to the interest-bearing purchases not the interest-free purchase. We could also see that Dongmei had accepted this.
We spoke to Dongmei to see whether her complaint had been resolved, and she explained that she wanted to make sure that it didn’t happen to others. To resolve Dongmei’s concern, the lender offered to update their FAQ on their website to explain in a more clear and accessible way how payments were allocated and when those payments needed to be made to make sure that any interest free purchases weren’t accidentally repaid before other interest-bearing purchases.
Resolution
Dongmei was happy with the resolution the lender offered her and she discontinued her complaint.
Insights for participants
Lenders should ensure that important information about the use of their credit cards is clear and easy for consumers to find and understand.
