AMEX is skirting the law....

[Anonymous]

In my AMEX statement today, I got a Notice of Changes to Your Account, which includes the following (bold, italicized emphasis added by me):

 We are changing how we apply payments on your account. Generally, payments above the total minimum amount due will be applied first to balances with higher interest rates. Accordingly, effective with payments processed on or after February 19, 2010, the last paragraph of the Payments section of your Agreement is deleted and replaced with the following:

"Subject to applicable law, we will apply and allocate payments up to the total Minimum Amount Due and any credits on your Account among balances and Charges in any order and manner determined by us in our sole discretion. You agree that we have the unconditional right to exercise this discretion in a way that is most favorable or convenient to us. In most cases, we will apply payments up to the total Minimum Amount Due to the minimum amount due on Feature balances (first to the Feature balance bearing the lowest APR and then to Feature balances bearing successively higher APRs), then to amounts due in full. After the total Minimum Amount Due has been credited to your Account, the amount of payments remaining will be applied to the Feature balance bearing the highest APR and then to Feature balances bearing successively lower APRs. In most cases, credits will be applied first to the balance from which the corresponding debit originated."

So basically, they can allocate the minimum due (and credits) any way they want to, after that, they have to follow the law...   Sneaky!!!

Message Edited by writemikep on 11-04-2009 09:16 AM

[CHARGE_IT]

The law basically changes nothing until after the minimum payment has been achieved. That is the way it is written.

CI

[Anonymous]

Exactly. I think a lot of people assumed that the entire monthly payment would be applied in a certain way.

I'm sure the credit issuers will take full advantage of all the benefits accorded them under the new law.

[boireann]

Very tricky way of splitting hairs within the letter of the law.   They've definitely found a way to keep making money off of those who don't PIF.  Sneaky sneaky. 

[Anonymous]

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@boireann wrote:

Very tricky way of splitting hairs within the letter of the law.   They've definitely found a way to keep making money off of those who don't PIF.  Sneaky sneaky. 

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All the MORE reason to only PIF

[Watchmann]

What??  You thought the 'protection' in the bill was going to defang the financial system and make it impossible for them to make money?  We must learn that credit is for convenience sake only, i.e., to buy things so we don't have to carry around large sums of money.  Except for houses and cars credit should be thought of as a short term loan (<1 month).  And forget about cash advances and balance transfers, they are a trap.  The easiest way to avoid any of these issues to to use your card and PIF each and every month.  Already have balances?  Go on the 'rice and beans' diet of Dave Ramsey, clean out your garage and attic and sell stuff, get a second job, and sock drawer the cards until you pay them off.  If you find you must carry balances you are living beyond your income and you have to tone down your lifestyle.    

Message Edited by Watchmann on 11-04-2009 05:00 PM

[Anonymous]

The next step for AMEX (and other lenders) will be to raise the Minimum Amount Due just enough so that most people won't pay any more than that each month.  That way the entire amount paid can be applied to the lowest APR balance, maximizing their profit from interest.  I'm sure their computers are hard at work, calculating that magic percentage...

And yes, I PIF every month, so this change won't affect me now, but still....

[voidman]

I love those lawyers. 

[Anonymous]

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@Watchmann wrote:
What??  You thought the 'protection' in the bill was going to defang the financial system and make it impossible for them to make money?  We must learn that credit is for convenience sake only, i.e., to buy things so we don't have to carry around large sums of money.  Except for houses and cars credit should be thought of as a short term loan (<1 month).  And forget about cash advances and balance transfers, they are a trap.  The easiest way to avoid any of these issues to to use your card and PIF each and every month.  Already have balances?  Go on the 'rice and beans' diet of Dave Ramsey, clean out your garage and attic and sell stuff, get a second job, and sock drawer the cards until you pay them off.  If you find you must carry balances you are living beyond your income and you have to tone down your lifestyle.    

Message Edited by Watchmann on 11-04-2009 05:00 PM

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I disagree, the invention of the CC was for the sole purpose of buying things on "credit" and then later paying them off. Obviously in the current economy things are a little rocky. But I'm not going to wait until I have the exact money to purchase whatever it happens to be that I want or need at the moment, I will buy it and pay it off as I have always done, whether it is a PIF or some number of monthly payments. If mistakes are made then it can hurt me, but that can said about anything.

I think once things settle down the CCCs are going to realize they need people spending money and they aren't going to want people sock drawering their cards, and I bet SD'd cards aren't going last as long as they once might have.

Message Edited by Cyrion on 11-05-2009 02:34 AM

[Anonymous]

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@Anonymous wrote:

Exactly. I think a lot of people assumed that the entire monthly payment would be applied in a certain way.

I'm sure the credit issuers will take full advantage of all the benefits accorded them under the new law.

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I think they would be stupid not to.

A publicly held company has the fiduciary duty to be as profitable as possible.