A Tale Of Interest

This is a story of something that happened to me over the weekend. I tell it as a cautionary tale to help those of you who have the potential to become ensnared, like I was. I want to make sure you know how to avoid this trap. 

This is a story about money. Because personal finances are just that, personal, I will not be giving exact numbers but I can make my point without the specifics. 

This past Saturday while I was enjoying the start of the weekend with my wife. About mid morning I walked to our mail box and picked up our daily USPS delivery. Among the assortment of junk mail and advertising fliers I noticed my monthly Best Buy credit card bill. 

Now, let me take a minute to explain our current situation. Although we paid off all our credit cards when we refinanced the house a couple of years ago we still have some credit card accounts that we use in a smart and beneficial way. 

Among the benefits we use is the Best Buy credit card account's deferred interest financing on major purchases. 

Our last major purchase was back in December 2012 when Paula got her Ipad and I got a Kindle Fire HD as Christmas presents.  

The amount we paid was enough to qualify for the "18 month no interest" option. That meant if we paid the total of the purchase within a year and six months we would pay no interest on the credit card balance. 

Now back to the story.

I went back into the house and opened the credit card statement expecting the balance to be less than what it was the month before. I had been paying the bill each month at the pace where I'd have the entire account paid off by October. 

I was surprised when I saw that my account balance was almost double what it was on the last statement. I hadn't made any major purchase in the last month. I was astonished and confused about the new "amount due." 

Upon examination of the statement I realized that the credit card company had charged me the amount of deferred interest for the December 2012 purchase. 

When I realized this I went from astonished to being angry. I felt this was a mistake. Not only that but the amount of the deferred interest charges was equal to nearly 33% of the original purchase amount a much higher percentage than it was supposed to be. 

I had paid, what I thought, was strict attention to my Best Buy payments making sure that I paid enough to cover the "no interest" amount before the 18 months had passed. 

Since I'm the one who pays the bills in my house I had been assuring Paula that I had them under control and was getting them paid off and on time. 

This turned out to be a case where my habit of keeping good records would be a benefit. I went back into my records and totaled my payments over the last year and a half. I had paid almost double the amount of the December 2012 purchase in payments. 

Of course I realized that I had bought other things on the card since then but the deferred balance should have been covered with the 18 payments I had made. 

With all my information compiled I made the phone call to the Best Buy credit card customer service line. By this time I was determined to prove to the CSR that my statement and it's new charges were wrong. 

The rep I got to speak with was named "Jessica". I'll admit I was not exactly calm when I talked to her. But I did my best to point out all the reasons why I thought that the new charges on my statement were wrong. And if the company insisted that they were not, I was going to know the reason why.

I must say having been a call center CSR I know how difficult calls like mine can be. Jessica was very good at her job. She listened to my issue. Allowed me to "vent" and get my points across to her. 

She explained to me that while my payments were more than enough to cover the special financing amount all of them were not applied to that balance exclusively. 

Because I had what's called a "revolving balance" on my credit card account in addition to my special financing charges; only 60% of my payments since January 2013 been applied to the "no interest" amount.

She told me that by law a percentage of my payments had to be applied to the revolving account with the higher interest, first, and then the remainder went toward the special financing balance. 

I didn't know this. I assumed that my payments were being applied to the balance from the oldest purchases first. It made sense to me. 

BTW, I'm am grateful that Jessica took the time to tell me about this to me instead of hiding behind the "it's explained in the "terms and agreements" information you received when you first opened the account sir" line. That would have really infuriated me. But she was very good, as I said.

After putting me on hold to consult with her supervisor, Jessica offered to credit me the interest charges back to my account if I paid the balance of the December 2012 purchase remaining on my account as of my last statement. 

That was exactly what I wanted when I called. I made the payment over the phone using my checking account information and thanked Jessica for her help. 

When the phone call ended I felt like I justice had been done. Both the credit card company and I had lived up to our agreement. 

So there's my story of the misapplied charges on my Best Buy credit card account and a lesson learned. 

Although I do like the rewards I get with the Best Buy card, in the future I will make sure not to have a "dual account" again. 

As both Paula and I have learned in the past it is very easy to get caught up in the web of credit card debt. For the most part we have learned our lesson. But because we still use credit cards and have open accounts; some times something happens that remind us just what a slippery slope credit cards can be. 

The rules and practices credit card companies are allowed to implement and hide behind to take their customer's money many times defy common sense and have many "loop holes" into which consumers can fall. 

I won't go into a rant on the specifics of what some of those loop holes are but if you are reading this and have credit cards (most people do) I urge you to take a fresh look at your statements make sure you are not being charged for something you shouldn't be. 

I was lucky that this time I discovered my issue quickly and was able to get it turned back in my favor. But the experience has made me determined to be more diligent in the future.