Deferred Interest Charge

Question

I am absolutely livid about the deferred interest charges.  I set up auto-pay as soon as I purchased a Samsung television after taking advantage of the 36-month, 0% interest promotion.  I set the monthly amount at well over what would be required to pay off the balance prior to the expiration of the promotion.  However, because of the way my payments were allocated, there was a balance left at the end of the promotion.  Because I had set up auto-pay and did not receive paper statements, I didn't realize there was a balance until I decided to take a look at what I owed back in January.  I was floored when I saw a $2,500 interest payment on the statement.  I called to discuss this issue and offered to pay the balance in full minus the interest charge.  I felt that this was reasonable as the promotion had expired only a month prior to my phone call to Best Buy.  The lady I spoke with said she could not take the interest charge off.  I told her that I was perfectly capable of paying the entire balance (minus the interest charge) right there on the phone with her and that, if she wasn't able/willing to work with me at all, I would have no reason to keep my Best Buy credit card active.  Why would I want to do business with a company that doesn't care to work with me, especially considering the amount of money I had spent on that card (even without the interest charge!)?  She was still unwilling to work with me, so I ended up canceling my card.  This was quite a poor decision on Best Buy's part as I had made a number of purchases on the card and planned to do so in the future.   I studied each of the statements from the prior year carefully and could not figure out how in the world the payments were being allocated.  Even though my monthly payment stayed the same, the amount allocated to the television changed every month.  This is without my making any additional charges to the card.  Some months, the amount allocated was more than sufficient to cover what would have been necessary to pay the balance in time.  Other months, almost nothing was allocated toward the television.  It made no sense.  I spoke with Citibank and they were not cooperative either.  I'm hoping that Best Buy will work with me on this issue before the expiration of my next promotion that I took advantage of on another large purchase.  If Best Buy is not able to work with me, I will be forced to transfer the balance to another card so I don't incur even more deferred interest charges.  There is no way I could make sufficient monthly payments to cover the interest that was put on the card plus the balance of the purchase I made on the other promotion before that promotion expires in July.   If this issue gets resolved, I would gladly re-open an account with Best Buy.  However, at this time, I have no reason to do business with a company that doesn't want to take care of its customers.  Yes, I understand that there are certain terms and conditions with which the credit card holder is to comply, but this is also a situation that could be remedied while maintaining customer satisfaction.  We shall see.

Answer 1

I would suggest to ALLWAYS look at your statements, whether you get one by mail or whether they are electronic.
Also, Best Buy doesn't make any decisions as to whether they'll remove interest charges. Citibank owns your card and only they have the power and authority to do this. Best Buy moderators on here may be able to talk to Citibank on your behalf to see whether they'll remove it, but since Best Buy doesn't own your credit card account, they have no legal authority to do anything else.
As to how payments are allocated. After the minimum payment has been paid each month, any additional payments will be allocated to the purchase with the highest amount of interest accruing and then once that is paid down, additional payments to the next highest interest purchase. Deferred interest is seen as 0 accrues interest since it will cost you zero interest if paid off according to the terms so additional payments don't get added to it until other interest bearing purchases have been paid off.
This sounds really bad and malicious, but in reality, the Federal Government decided that this is how payments will be allocated via the CARD Acr of 2009. Citibank is merely following federal law on how they allocate payments. You can change this by contacting the bank during your deferred interest period and telling them how you want it allocated, but per the law, you must initiate that contact.
Hope this helps explain how the payments are allocated. It makes it harder for deferred interest plans, especially when you make other purchases with the card that bear interest. But that's the way the federal government decided banks had to allocate payments.