ALERT! Some banks changed "high to low" payment allocation! WARNING!
I thought one of the Federal regulatory bodies changed some debt payment regulations in favour of consumers for payments, balances, account reporting, etc. and "high to low" method of payment allocation policy is mandatory for all banks and CC companies. I paid some on my CC outstanding balance which have low and high interest rates, and they said they changed the "high to low" method of payment allocation (payment will go to higher interest rate balance first and then remaining, if any, to lower interest rate balance) policy effective March 20. This is not fair IMO and banks and CC companies will s***w us more if this is allowed. I will contact Consumer Affairs Office, but would like to hear some thoughts on this. Thanks
Fact one (Thanks fahk):
Under the Credit Business Practices (Banks, Authorized Foreign Banks, Trust and Loan Companies, Retail Associations, Canadian Insurance Companies and Foreign Insurance Companies) Regulations,
(1) If different interest rates apply to different amounts owing for a particular billing cycle on a credit card account, the institution must allocate any payment made by the borrower that is greater than the required minimum payment for that billing cycle among those amounts using one of the following methods:
(a) by allocating that payment first to the amount with the highest interest rate and then allocating any remaining portion of the payment to the other amounts in descending order, based on their applicable interest rates; or
(b) by allocating that payment among those amounts in the same proportion as each amount bears to the outstanding balance owing on the credit card account.
If you want to make a complaint, you need to direct them to FCAC as it is not within provincial jurisdiction.
http://www.fcac-acfc.gc.ca/eng/resource ... p#lump-sum
So far MBNA and RBC are two banks that do not use HIGH to LOW interest first allocation method (Thanks epiphano).