Capital One
Payments applied to a lowest rate balance first

Back in October I got a promotional offer from Capital One for a 0% balance transfer for 18 months. I had a motorcycle which I was paying off and thought that it was too good of a deal to pass, so I decided to transfer my balance from bike dealer to Capital One. This was the first balance transfer in my life so I was very cautious. I read the offer letter back and forth couple times, not omitting any fine print. I also called Capital One twice and spoke to two different customer service reps about any possible fees and I was assured that the only fee I will be paying is the balance transfer fee, which was around $137. So I went ahead and transferred.

I didn't use Capital One, since I had another cc for all my daily purchases. All I needed Capital One for was the balance transfer. I divided my transferred balance into 18 equal payments and was going to pay $400 every month.
Then at the end of December I took a 2 week trip abroad. I took Capital One with me, since it's one of those credit cards that do not charge foreign currency exchange fees. During my trip I charger around $2,500. When I got back, I paid $2,500 $400 (monthly balance transfer increment) immediately.

And then - surprise, surprise - a bill comes with a nice $37.00 finance charge. I immediately called customer service and explained the situation. The associate agreed and told me that the finance charge will be reversed. Next bill came - no changes. Prior charge was still there another one for the current month.

Thinking it was just a system error, I called again. And only then I heard the mysterious combination of words: "Your payments are applied to the balance that has the lowest interest rate, first". I cannot describe in words how I felt at that moment. I was shocked. I felt robbed in the middle of the day. I asked the rep - why in my right mind would I want to pay off the lowest rate first? And all he could say - I am extremely sorry. Of course then I was transferred to the supervisor, who promised to investigate. But if they decide to investigate for months, I don't want to be paying those extra $35!!!

Am I the only one that has problem with it? How come credit companies are allowed to do this? Why there is no disclosure about this in the offer letter?

Company: Capital One
Country: USA
State: North Carolina
City: Charlotte

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