Hello,
I received a dreaded Valentine's Day message from Discover in my online message center. After reading and re-reading and breaking down all these terms sentence by sentence, I'm still trying to understand how this will affect my account. Will my finance charges skyrocket? Would anyone here who understands what they're trying to say be able to translate this in laymen's terms? I think an explanation would help a lot of people on the boards receiving these changes. I currently have a very large balance that I'm paying off (a lot of charges from YEARS ago), and will not be charging to the card any more. Any kind of explanation is greatly appreciated. I have a headache even trying to decipher this!:
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THE FOLLOWING WILL APPLY TO YOUR ACCOUNT EVEN IF YOU DO NOT WISH TO ACCEPT THE ABOVE CHANGES OR IF YOUR ACCOUNT IS CLOSED.
How We Calculate Periodic Finance Charges
We are changing how we calculate Periodic Finance Charges when no grace period applies. We are replacing the current “How We Calculate Periodic Finance Charges” section with the following:
“How We Calculate Periodic Finance Charges. We begin to impose Periodic Finance Charges on all transactions from the Transaction Date for the transaction as shown on your billing statement, unless a transaction is posted to your Account after the close of the billing period in which it occurs, in which case we begin to impose Periodic Finance Charges on that transaction from the first day of the billing period in which it is posted to your Account. We continue to impose Periodic Finance Charges until the date you pay your entire New Balance, by making payments or receiving credits. However, if you paid the New Balance on your previous billing statement by the Payment Due Date shown on that billing statement and you pay the New Balance by the Payment Due Date on your current billing statement, we will not impose Periodic Finance Charges on new purchases, that is, purchases first appearing on the current billing statement. We call this the “grace period.” There is no grace period on balance transfers or cash advances.
We sort your transactions into groups of purchases, cash advances, and balance transfers and then further sort the transactions within each group by their Annual Percentage Rate. For example, purchases subject to a promotional rate and purchases subject to a standard rate would be separate groups. We refer to these groups as transaction categories. At the end of each billing period, we compute balances and Periodic Finance Charges for each day of the billing period for each transaction category. We use the following equation to compute Periodic Finance Charges for each transaction category:
(Average Daily Balance) times (days in billing period) times (Daily Periodic Rate).
(You may refer to the finance charge summary on your billing statement for these amounts.) Then we add up the Periodic Finance Charges for each transaction category to get the total Periodic Finance Charges for your Account. The Average Daily Balance is shown as zero if, because of the grace period, no Periodic Finance Charges apply to the balance in a transaction category.”
How We Calculate Your Balances
We are changing how we calculate the balances upon which we impose Periodic Finance Charges. For each transaction category, we will now add new transactions to the daily balance for such transaction category as of the Transaction Date for the transaction as shown on your billing statement, unless the transaction is posted to your Account after the close of the billing period in which it occurs, in which case the transaction will be added to the daily balance as of the first day of the billing period in which it is posted to your Account. We are replacing the current “How We Calculate Your Balances” section with the following:
“How We Calculate Your Balances. We use the Average Daily Balance (including new transactions) method of calculating the balance upon which we impose Periodic Finance Charges. We compute the Average Daily Balance for each transaction category by adding up all the daily balances in a billing period for a transaction category and dividing the total by the number of days in the billing period. We compute the daily balance for each transaction category on each day by first adding the following to the previous day’s daily balance: transactions with a Transaction Date of that day as shown on your billing statement, unless the transaction is posted to your Account after the close of the billing period in which it occurs, in which case the transaction will be added to the daily balance as of the first day of the billing period in which it is posted to your Account, fees charged that day and Periodic Finance Charges accrued on the previous day’s daily balance; and by then subtracting any credits and payments that are applied against the balance of the transaction category on that day. In calculating the daily balance for the first day of the billing period, we consider the “previous day’s daily balance” to have been your balance for each transaction category on the last day of your previous billing period.
All fees charged to your Account are added to the standard purchase transaction category with the exception of Cash Advance Transaction Fee Finance Charges which are added to the applicable cash advance transaction category and Balance Transfer Transaction Fee Finance Charges which are added to the applicable balance transfer transaction category. When the special rate expires, we move the unpaid balance of the balance transfer and the Balance Transfer Transaction Fee Finance Charges to the standard purchase transaction category. However, if the special rate has been terminated under the Default Rate section, we leave the unpaid balance of the balance transfer and the Balance Transfer Transaction Fee Finance Charges in the applicable balance transfer transaction category until the special rate would have expired.”
Starting Score: 557 (2005)
I received the same message and I am still trying to decipher the darn thing. I don't carry any balance so I HOPE it doesn't affect me -
why do they write it in such complicated legalese language? is it so the consumers don't understand what they are getting into? i wonder 
I hope they are sending their customers a paper copy of these changes (I figure they will) - the message was only online, and will be "deleted in 30 days" - so I hope that doesn't leave out people that don't notice right away they have a message online.
Yep I got the same online msg. After reading it. I was like oh yeah i'm going to pif and cancel, then na i'll keep a low balance and keep pif and never go crazy on it. Wow when the going get tough, the cc's companies get tougher.
I guess my question is whether the way they are calculating my finance charges will skyrocket from where they're at (I cannot pif right now). The language they're using is very confusing. If finance charge calculation is going to be insanely higher than it was before, I may be sol since it's not an option to opt out, and I have nowhere to transfer the balance...