Hi, I sent this message to Paypal Credit, but wanted to share it on the forums in the chance that others may notice some discrepancies which need to be brought to Paypal Credit's attention. It's somewhat long. Forgive me.
Also I'm sorry if this has been talked to death, but it appears at least is still an issue.
Hello, I recently made a payment on my paypal credit account and had an issue with the way my payment was applied. In August I had a total balance of $878.45 of which partly consisted of 2 promotional balance purchases both made in August totaling to $631.99. I made 4 smaller purchases of $146.46 and had an existing balance of $100, that totaled to $246.46. I made 2 payments totaling to $278.45 leaving me with a final balance of $600. Looking at my promotional balance on August 5, 2016 for $399.99, I see a remaining balance of $221.54 meaning that $178.45 was paid to my promotional balance. The remaining $100 of my of my $278.45 payment presumably paid the existing $100 balance at the start of the month.
Why is this $178.45 going to pay down my promotional balance which ends 6 months from now and not to the 4 smaller purchases which don’t have a promotional balance?
This is against the terms of the user agreement.
https://creditapply.paypal.com/apply?guid=ZM1LV5J9&assetId=PPCMICRO#
“10. PAYMENT APPLICATION AND PREPAYMENT:
We will use each payment in the amount of the Minimum Payment Due or less, first to pay billed Monthly Plan Payments on any Easy Payments Purchases, then billed interest, then billed fees, then the principal balance, and then any other amounts due. However, if you have a balance on a Deferred Interest Purchase, during the two Billing Cycles immediately preceding its Expiration Date, we may use the payment, after the amount to pay billed Monthly Plan Payments on any Easy Payments Purchases to pay the balance on such Deferred Interest Purchase.
You may at any time pay, in whole or in part, the total unpaid balance without any additional charge for prepayment. If you pay more than the Minimum Payment Due in any Billing Cycle, you still must make the Minimum Payment Due the next Billing Cycle. We will use any amount in excess of the Minimum Payment Due to pay the balances with the highest interest rate, then the next highest interest rate, and so forth. However, during the two Billing Cycles immediately preceding the Expiration Date of any Deferred Interest Purchase, we may use payments first to pay the balance on such Deferred Interest Purchase(s). We may choose to apply prepayments to the Deferred Interest Purchase balances before other balances.”
Payments should be applied to the smaller balances first since they will still be accruing interest while the promotional balance is paid off. The only exception to this rule is in the case of a promotional balance ending in 2 billing periods, which obviously doesn’t apply to a purchase made in August.
Depending on how Paypal Credit is defined as a creditor, this also appears to be a potential violation of the Credit Card Accountability, Responsibility and Disclosure Act of 2009 which clearly states how payments are to be applied.
https://www.ftc.gov/sites/default/files/documents/statutes/credit-card-accountability-responsibility...
Title 1, Section 104:
‘‘(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. ‘‘(2) CLARIFICATION RELATING TO CERTAIN DEFERRED INTEREST ARRANGEMENTS.—A creditor shall allocate the entire amount paid by the consumer in excess of the minimum payment amount to a balance on which interest is deferred during the last 2 billing cycles immediately preceding the expiration of the period during which interest is deferred”
This is matches almost verbatim with the Paypal Credit terms of use.
My promotional balance should not be paid before my other purchases unless my promotional period will run out in 2 months. Otherwise no one should ever use Paypal Credit for any purchase that doesn’t meet the promotional rate threshold.
I hope you can assist me with rectifying this matter. No one wants federal regulators to find Paypal Credit in violation. Thank you.
-Phalloidin
