Taking DBS to court over cash advance handling

[jpatokal]

This doesn't happen very often, but now I'm pissed

I just spent half an hour on the phone with DBS having an enlightening discussion about cash advance charges. Bear with me, this gets a little complicated.

When you do a cash advance with a DBS credit card, you are charged a cash advance fee (up to S$10) and a finance charge, calculated as interest at 3% per month with a S$2.50 minimum. For example, I withdrew 3000 baht last December 23rd, and was charged S$125.77 + S$10 + $2.60 for it.

So far, so good. Now here's the problem: the finance charge is calculated on January 20nd, which is when the bill is sent out. I received my January bill for S$138.37, which I paid in full on the due date of February 15th...

But DBS slapped me with another S$2.50 charge in my February bill. Why? Because the interest continued to increase between January 20, the billing date, and February 15, the payment date. I paid the S$2.50 again the next month, but this problem kept on looping and that $2.50 has showed up in every single bill since. And now that I called DBS, they oh-so-graciously agreed to waive the charge -- for the past 4 months. Problem is, this has been happening for 36 months. I already called them previously about the same issue and had it waived once before, but the idiot who answered the phone then couldn't explain what was happening and assured me it was a one-time thing.

Some small print of interest on the bill: If payment is not made in full, a finance charge of 24% per annum (subject to a minimum charge of S$2.50) will be levied on the outstanding balance from the date each transaction was effected...

Is it just me, or does DBS have absolutely no right whatsoever to charge finance charges when a) I pay my bill on time and in full, and b) for something they don't print on my bill at all? What they should be doing is calculating the interest as it will be on February 15th and charging me that amount.

The amounts here aren't big, but this is obviously a systemic issue and DBS is making hundreds of thousands from these "finance charges". Any other DBS victims out there who would be willing to sign up to a CASE complaint or Small Claims Tribunal claim? Hell, if I was in the United States this would have "class action lawsuit" written all over it...

Do other banks in Singapore also have this same issue? (My bank back in Angmohland certainly didn't.)

[Quasimodo]

I never paid much attention to that, although I do travel a lot.

Some small print of interest on the bill: If payment is not made in full, a finance charge of 24% per annum (subject to a minimum charge of S$2.50) will be levied on the outstanding balance from the date each transaction was effected...

This pretty much universal.

Can you provide more info on the first section - if it i as you say then it might be of interest to do something about it.

[sundaymorningstaple]

I have an overdraft facility at Standard Chartered that does much the same thing. If I pay the bill in full as soon as I received it 10 or 12 days afer the closing date, the following month will have the damn interest charged to it as well. The only way I could do it was to pay 2 x the minimum amount and leave the credit balance there ($1 or so - my time is more valuable that sitting on hold for 20 minutes listening to crap advertising about the bank). Now, I receive the statement every month with a small credit balance that does not change. P1sses me off but how?

[Wind In My Hair]

i had a similar experience once with the cash advance facility and never used it again. not DBS though, think it was UOB. and i was on their case the very first month i saw the small but unreasonable charge. can't quite remember but think they refused to waive it. yes it was very annoying.

[jpatokal]

I never paid much attention to that, although I do travel a lot.

Some small print of interest on the bill: If payment is not made in full, a finance charge of 24% per annum (subject to a minimum charge of S$2.50) will be levied on the outstanding balance from the date each transaction was effected...

This pretty much universal.

The above I'm OK with it. The issue here is that they are charging me for something that is not printed on my bill, despite me paying the bill in full.

Can you provide more info on the first section - if it i as you say then it might be of interest to do something about it.

What more information do you need? I thought my explanation was pretty thorough, but it took me a while until I could wrap my head around the cause...

[jpatokal]

Hmm-m, interesting! Here's an extract from DBS Credit Cards' T&C regarding cash advances:

4.4 CASH ADVANCES

Notwithstanding the overall credit limit referred to in Clause 2.1, you may use your Card to obtain cash advances only up to the limit determined by us from time to time, whether or not such limit is notified to you. If a cash advance is obtained through the use of your Card and/or the PIN of your Card, we may debit the Card Account of your Card with:

1. the fee stated in Clause 4.3(f); and
2. a finance charge (at the rate stated in Clause 4.2) on the amount of the cash advance as from the date the cash advance was obtained until full payment of the outstanding balance of that Card Account is made.

Can DBS argue that the balance they bill me is not the full payment? Note that my bill also states, in part, "Any Full Amount will be deducted from bank account XXX, GIRO deduction date YYY".

* * *

One fix to the math earlier: it's 3% of the amount withdrawn with a $10 minimum (in the example $10) and 24% per annum, calculated daily, with a S$2.50 minimum. Oddly, though, according to this a principal of $125.77, 28 days (Dec 23 to Jan 20) and a rate of 0.24 should only come out to $2.35. Compounding for an extra 23 days (Jan 20 to Feb 15) gives $4.48.

Then things start to get weird. On Feb 15, I pay $2.60, leaving $2.13 unpaid. During the next 23 days, this accumulates a whopping 4 cents in interest. On Mar 15, I pay $2.50, leaving me with a credit of 33 cents. Why does DBS still keep charging me?

[sundaymorningstaple]

The answer to the question is as follows: on the back of most credit card bills is whole bunches of fine print regarding all the crap you are talking about. It also mentions that the will apportion your payments to the account as they see fit. This means your payment pays the interest FIRST and the balance on the principle. This means that because interest has accrued since the billing statement date, then the balance unpaid is always principal thereby incurring the minimum charge the following month. It's sucks but if you look hard enough you will find it stated somewhere.

[jpatokal]

sms: I just ran the math according to what you said, but it still doesn't work out. Any way you look at it, after I pay off the balance of S$138.37, there's only $2.13 left unpaid. Even if I compound the interest on this as the principal, that is, for the full 2 months and 20 days, I still get no more than $0.12 in the interest.

So what they seem to be doing is charging a flat $2.50 as penalty, and then not applying that to my balance. This seems equally egregious to me!

For what it's worth, here's the full T&C for DBS cards; the section on cash advances is surprisingly brief and was mostly quoted above already.

[sundaymorningstaple]

sms: I just ran the math according to what you said, but it still doesn't work out. Any way you look at it, after I pay off the balance of S$138.37, there's only $2.13 left unpaid. Even if I compound the interest on this as the principal, that is, for the full 2 months and 20 days, I still get no more than $0.12 in the interest.

So what they seem to be doing is charging a flat $2.50 as penalty, and then not applying that to my balance. This seems equally egregious to me!

For what it's worth, here's the full T&C for DBS cards; the section on cash advances is surprisingly brief and was mostly quoted above already.

I gave up a long time ago trying to get various Excel Interest calculators to compute the interest the way the CC companies do it. But it does seem that what you say is true. The $2.50 Charge become the principle as soon as it is levied even though only 12¢ is actually interest. I notice that on the website that what I was talking about is noted there as Item

10. APPROPRIATION OF PAYMENTS

We have the right to appropriate all payments made by you in any manner or priority that we see fit even if you or the person making the payment indicates such payment is meant for a specific purpose.

Damned if you do and damned if you don't. Can't very well carry huge amounts a cash around so I guess they got us by the short & curlies!

[Splatted]

citibank is notorius for doing the same.

I've gotten into the habit of repaying my redraw account with about $10 extra to account for the unbilled interest,.. sometimes $100 extra depending on the amount I had borrowed,..

then after the dust settles, I withdraw the surplus by paying a bill or transferring the remainder into my bank account

[riversandlakes]

OP's post sounds like what's covered in the fine prints. Why the complain? If it's not covered then by all means take 'em to court...

I've used the cash advance thing only once too. Real $ucker$.