Transfer of money to pay credit card
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Ms M owed a debt of $15,932 on a credit card account with a limit of $13,000. On 27 July 2006, Ms M’s bank took $983 out of her transaction account to reduce the debt on her credit card account.
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This was a surprise to Ms M who did not know that the bank could combine her accounts and take money from her savings account to pay her credit card debt. Ms M said she did not receive any notification that it would occur.
Ms M rang the bank and explained that the money in her transaction account was savings for utility bills and school fees. She asked that the money be returned but the bank refused. Ms M complained to BFSO, which then referred the dispute to the bank for a response.
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The bank’s response
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The bank said that it had acted in accordance with the terms and conditions of Ms M’s credit card when it transferred the money from her savings account.
After speaking with Ms M, however, the bank concluded that it had not properly assessed Ms M’s ability to repay her account when, on several occasions, it had offered her credit card limit increases.
It was also clear to the bank that Ms M was experiencing financial hardship because she was struggling to pay her credit card and she needed the money that had been taken out of her account for bills and school fees.
On this basis, and taking into account BFSO’s guidelines on maladministration in lending, the bank proposed to waive $8,975 in interest and accept a fixed repayment plan of $100 per month to clear the debt. The bank agreed not to charge interest on the debt.
In addition, the bank reversed the transfer of $983. Ms M was happy with the resolution proposed by the bank and BFSO closed the file.
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