Hyperbolic, sure. But I'm feeling a little pissy right now.
I refinanced recently for a variety of personal reasons. Of course, as soon as I did that, my name and particulars went zipping 'round the world to all the "business people" who prey on mortgage holders, offering all manner of special services designed to make my life easier. They offered a service where, for a low monthly fee, they could arrange it so I would pay down my mortgage more quickly, paying off principal more rapidly, simply by changing my payment methods. Instead of one big chunk, the bulk of which is applied to interest and some smidgeon of which goes to principal, once a month, if I align my payments with my pay cycles, add a little bit on top of each bit, I would be applying more to the principal. I'd also be taking advantage of extra payments during the months that had extra pay periods in them.
Yowza! Great idea, thought I! I can easily set that up for myself using my free on-line banking bill pay service.
And so I did.
January went off without a hitch, but someone in accounting woke up from their nap when they got the first part of my February payment. I got a nasty gram. I got a phone call from a 'bot telling me there was a problem and to call an 800 number.
I called.
"We don't accept partial payments," intoned the nice lady. "They confuse the system."
Oh. I didn't realize you didn't have computers there. Sorry.
"We have computers. It's just that it's against policy to accept partial payments."
Um. Why?
"Well, it confuses things. The system isn't set up for it. They might misapply your payment."
Define "misapply." Like, you put it into someone else's account? What?
"Well, I can see they did misapply your early January partial. They used it to pay down the principal."
That doesn't sound like misapplication. That is exactly what should happen, in fact. But we're getting to the nut of it. See, the bank will help me be "flexible," if I so choose, by setting up a "flex pay" system for me, where by for a low per-draft fee they will "draft" a charge against my bank account to make the partial payment for me, and then they will apply the partial payment "correctly." That is to say, they will charge me money so they can set things up so I will pay the interest amount as well as the minuscule bit of principle they take out of each payment at the front end. Not only that, but THEY will control the amounts I pay and THEY will suck it out of my account for me.
This is why the banking industry must die. I accepted the interest rate they are charging me, and understand they front loaded it so as to maximize things. They are getting that full amount that they calculated for each of my payments. But now if I choose to reduce my principle faster, they have found a way to leech even more out of me.
They suck.
gekko: darned good walkies companion.
Actually, I think that refusal might be illegal, though I am certainly no lawyer. I remember some years ago some legislation was passed that forced banks to allow early payment of mortgages -- until then, some banks had an early-payment penalty to discourage people from paying off their mortgages. That was made illegal, and banks have to take your payments without penalty. I'm not sure the same legislation would cover allowing biweekly payments, since I'm no lawyer. I suspect that if you consulted an attorney, however, he or she could get the bank to back down.
I agree, Billo. They were specific when they said "You can keep doing that, but your payments might be misapplied," as though that were a horrible thing to consider. They'll probably watch the account and then manually adjust the payments to apply to the interest then principal, and continue to send me hate mail and recorded phone calls.
Gonna dig through the loan agreement forms to find the specific language, tho.