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Barclay’s Bank May Be Violating The CARD Act

by Jason Steele

Just over a year ago, I signed up for a Frontier Airlines Visa through Barclay’s bank.   It was a great offer, with 40,000 bonus miles, potentially enough for two award tickets on Frontier Airlines.   The annual fee was waived the first year, so I kept the card after I had earned the bonus miles.    At the end of the year, I called to cancel when I received notice of the annual payment.    At that time, I had made a typo, and paid my bill a dollar short.   When I canceled the card, I realized that I still had a balance of a dollar after the annual fee was removed.   To my surprise, the representative informed me that I did not have to send the dollar in, and that they would close the account with a zero balance.

Guess What Happens Next

A month passes and I get a bill from Barclay’s for $24.    They had taken the dollar, charged me some kind of minimum interest charge of a dollar for three months (don’t ask me how) and added a $20 late charge.   Very frustrated, I called them immediately upon receipt of the bill.    Again, I was told that the balance would be forgiven, as well as the late fee.

Wait A Second…

I remember reading that the CARD Act put limits on the amount of late fees.   Specifically, a late fee cannot be more than the amount owed.    According to the web site of the Federal Reserve Board“…your credit card company cannot charge a late payment fee that is greater than your minimum payment. So, if your minimum payment is $20, your late payment fee can’t be more than $20.”

I am no lawyer, but it appears that Barclay’s may be violating the CARD Act.   Of course, I have no case, since they immediately credited me the fee and my balance (or so they say), but I am no left wondering how many people are getting caught up in this.

If This Happens To You

Any time you get a late fee, you should call your bank and ask for it to be waived.   Unless you do this very often, your bank will almost certainly grant your request.    Certainly if you ever receive a late fee that is greater than your minimum payment, you should also point out your bank’s potential violation of the CARD Act.   If you are in a really bad mood, you may also wish to alert Federal regulators.

The CARD Act of 2009 has been the greatest piece of consumer finance legislation in my lifetime.  Familiarize yourself with it’s provisions, and you will never be taken advantage of again.

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3 Responses to “Barclay’s Bank May Be Violating The CARD Act”

  1. mey Says:

    “The CARD Act of 2009 has been the greatest piece of consumer finance legislation in my lifetime. Familiarize yourself with it’s provisions, and you will never be taken advantage of again.”

    I absolutely agree with this! For consumers, there have been a lot of fixes to some really unfair practices and “gotcha” fees thanks to the CARD Act. Of course, I’m still going to keep working on Congress to continue to improve things. :D (Go Elizabeth Warren!)

  2. Ben Says:

    Wasn’t a violation as more of a system glitch. No human balances out the statements prior to sending them out.

    What could have caused this was that your annual fee “waiver” is not a waiver but a credit to the account. Therefore the annual fee was a charge that was on the account and sat there for a set period of time. The fact that you received a min interest charge shows that you revolved a small purchase balance. When they issued a “credit” for the annual fee this does not negate the minimum payment from your PREVIOUS statement in which the balance was owed by the due date. Look at your statement prior to that and look at what your min payment was. This is what caused the statement to generate a late fee of $20.

    Either way, they credited it back because for a consumer to fully understand revolving balances is a bit tricky. So instead of having the argument that it came from a previous revolving balance it’s easier to waive the fee. A violation of the card ACT would be if they were intentionally charging higher egregious fees and hoping they don’t get caught. This was a simple billing error that was corrected by the bank. Applaud them for correcting the mistake rather then using accusatory rhetoric.

    Also, be careful before you start throwing out the card ACT. My understanding is that Barclays does not have strange TOC’s. However other banks have TOC’s that state they can charge fees based on the account balance and in a tier. So therefore if you sign those TOC’s you are agreeing to different terms that are not expressed in Regulation Z

  3. Ben Says:

    ** Addition to last post **

    Usually business cards or cards for corporate usage are not governed by consumer card ACT. And therefore these accounts can actually charge different late fees on the account.. Not relevant to your situation but an example that the card ACT is not all inclusive for every situation.

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