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Just Wow
Posted by Tank78 on 01/23/2009
Truth be told; my first gripe with Discover goes back to an offer for a consolidation loan that they only offer to their top members with great payment history which I chose to accept but was then denied for. I'm not a big fan of soliciting an offer then not being able to deliver when the offer is accepted.

Despite the earlier disrespect; I was willing to give Discover Card another opportunity to keep my business. I recently came into some money that allowed me to repay ALL revolving debt and as of now I am debt free save for my monthly house payment. I payed my nearly 5,000 balance (including all new charges) prior to that month's statement closing date and thought that would be the end of it; after all nearly every credit card I've EVER had has worked under the same terms, pay in FULL prior to statement closing date and pay no new Finance Charges. So imagine my surprise when I came home today to find a statement from Discover in my mailbox asking me for $109.16 in finance charges.

I sat through the 20 minute menu of Discover's automated system before getting one of India's finest (to his credit, at least I could understand him and he could understand me) to explain to me just what the score was. He explains that the fact I just paid 5,000 prior to the statement closing date (as had it been after, I'd have at least somewhat understood) meant nothing and these finance charges were actually BACK charges.

By this point, I'm not even going to argue; I simply go straight to the jugular. "Let me pay you and close my account" The customer service representative on the other side tells me to hang on, he's looking into something; which I assume is going to be a concession of some sort to keep my business in these troubled times; God knows I've given enough concessions in MY business to keep my customers happy and coming back each month; despite being "right". As it turns out after a short hold he simply reaffirms my request to pay and cancel. I advise him, yes this is what I'd like to do; though he'd do well to redeem my 25.19 in Cashback Rewards towards this final payment prior to taking one red CENT from my account. He advises I only have 20.00 available for redemption, so now this 109.19 dollar bill has just become 94.38. Fine, process the payment and I'll just forget the 5.19 I've "earned".

Bottom line is I'm disgusted I've ever done business with this company. From this day forward I will make it my life's mission to do everything I can to make sure this laughing stock of a company doesn't get another red CENT from anyone out there.
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Posted by Anonymous on 2009-01-23:
I agree with you that Discover is the bottom of the barrel as far as credit cards go, but I think you may be mistaken about the interest. Revolving credit generally accrues interest on a daily basis. The amount of money you were billed would have been the daily interest between when you were last billed, and when they received your payment.
Often if you call them and ask for a payoff amount, they will quote you an exact amount and tell you how many days that figure will be valid, and if you pay off within that timeframe, there is no additional interest due.
Posted by Tank78 on 2009-01-28:

I appreciate your feedback; and I'm sure that's probably the argument they would make. I'm not one who doesn't read the fine print on his customer agreement then whine's about it. I don't doubt for a second they COULD have charged me; based on the terms of the agreement; I just think that it most definitely was not in their best interest to do so; either now or to anyone I care about ever again.

I guess the biggest issue in this situation is more ME than them. I work in a service industry myself; and frankly I've waived more fees, charges and basically given my customer's more lee-way when I diddn't have to because it was what is BEST FOR BUSINESS! Losing that minimal amount of money now was worth what I'd continue to collect in the long run; it's like Amerillo Slim's Maxim in action; you can sheer a sheep many times; yet only skin him once. . . I'm not SKINNING anything I don't have to right now.

Discover saw things differently. They chose to lose an account of over 10 years and SEVERAL thousand dollars over 84 bucks and some change. Does this make them WRONG, not necessarily (though I do still disagree with the charges that started this whole mess as a term of administration); does it make them STUPID~! Most certainly.

Thanks for taking the time to read and respond! Best wishes for a blessed 09.
Posted by datguyfenix on 2009-03-10:
If you think Discover is bad, try dealing with similar crap from Citibank or Bank of America's credit-card divisions.

Bottom line, by law, these credit-card issuers are allowed to average daily balance over a sixty-day period to charge interest, when you carry a balance over from one statement to another.

Your argument that paying off a balance prior to next billing date should mean no further interest, seems good on paper...but this is amongst the many arguably stupid and definitely ruthless ways credit-card issuers make their money.

And if you thought they lost your business and thats the end of it, I am afraid they may still have the last laugh...check to see how closing that account may have dinged your credit-scores.

In this sod-all system, only the system wins...not us end-users.
Posted by Happy Gal on 2009-03-24:
First of all, this customer does owe finance charges if she just paid the balance based on the statement amount. If the statement is printed on 03-20 with a balance amount and the account is paid on 04-09 (due date), the interest from 03-20- 04-09 still accrues and is owed. This interest will show on the next months billing statement. This is not complicated. Also, Discover Card does not outsource its customer service representatives. You will not speak to an Indian person unless he/she lives in the U.S.- (except if you speak Chinese). Do research before posting silly complaints, this isn't rocket science.
Posted by Tank78 on 2009-03-24:
Happy Gal and Datguy

I appreciate you both taking the time to read and comment, however you still both seem to be missing the point I made following Tom's comment, so let me say it again for the cheap seats. I AM NOT DISPUTING THAT DISCOVER WAS WITHIN THEIR RIGHTS TO CHARGE AND COLLECT THESE FINANCE CHARGES. What I am saying is that it was not within their best interests to do so; and most other CC companies I STILL do business with make it nice and simple, pay the amount on the statement before the next statement comes due, and no new finance charges go on; nice and simple. Discover seems not to abide by this principal, and in fact values it over my thousands of dollars in revolvind debt; so they can keep their principles and I'll give my thousands of dollars to revolving debt to a creditor who deserves it.

On a personal note, thanks Datguy for keeping it civil. (and I'm not that worried about the FICO score, I'm making up the hit elsewhere) And while I'm sure your heart is in the right place happy gal, if the gentleman I spoke to is American, he's got the worst accent and grammar this side of Bangledesh, and as for your "research" comment. This isn't a site to post doctorial thesi; it's a consumer awareness forum. . . ON THE INTERNET. There are plenty of ill-informed; poorly researched scribings in cyberspace; but frankly since this was a summary of personal experience posted to a forum dedicated to educating others based on said experience I feel justified in every word written. But again, thanks for taking the time to respond; and all the best.
Posted by hello dolly on 2009-03-24:
One of the best reviews I've read lately. Not whiney or bashing just straight forward. You probably will weather this tough financial time well given your optimism and upbeat personality. The interest was correct though.

good luck. Oh and by the way I gave up on Discover for the same reason years ago. It was general pricipal more than any other reason. i haven't missed them one bit either.
Posted by Anonymous on 2009-03-26:
This is called "double billing" or "2 cycle billing" which is wrong. If you pay your entire balance off BEFORE the due date....you're done. You can't acquire new interest charges on a 0 balance!
I had a huge fight with CHASE about this and won. JERKS!
Posted by prettyinpink1234 on 2009-05-08:
discover call centers and out source call centers are in america unless you press 2 for spainsh (you get mexico). and part of the new terms level change they gave up 2 cycle billing. and the reps would bend over backwards for you except their hands are tied by the computers. they cant make adjustments when the option isnt availble in the computer.
Posted by Happy Gal on 2009-05-09:
Sorry to offend Tank78, my honesty can be brutal at times. I also understand that this isn't a forum for composing a thesis. On that note, I do have a tendency to blame consumers for not educating themselves before posting (I'm sure you received the terms for your credit agreement, boring but worth reading). From what you've been stating you think you deserve a break from paying interest that you owe because you are a valued customer (you agree they have every right to charge it, yet you think they are terrible for not waiving it for good customer service purposes- I get it, and I got it the first time). That would be nice, but your original post suggests that you feel entitlement for some type of interest waiver. I agree with you that it would be wonderful for companies to make occasional concessions but they certainly aren't under any obligation. I understand your frustration but you have to remember it is ultimately YOUR interest charge.
Posted by annonymous1987 on 2009-07-21:
Discover Card does not outsource. If you speak with someone who has an accent, its becuase they are a different nationality, liveing and working in the US legally. Probably Born here too.

Posted by ohiotodd on 2009-10-06:
I have to agree with the original poster of this message. I have a Citibank card with no balance. Have not used it in months. They gave me a 1.99% balance transfer rate for 18 months. So I paid off 4 accounts with that money, approximately $15,000. No I have 1 balance, 1 payment at low interest for 18 months. They sent me a check and charged me a one time $99 balance transfer fee. I deposited the check into my checking account and paid off my other 4 accounts - Chase, US Bank, American Express, and Discover. I paid all of them electronically and made sure all received the full payment (my balance) by the due date. This was about 3-4 weeks ago and I have gotten statements for all 4 cards. US Bank, American Express, and Chase did not charge me ANY interest. Because I paid my balance in full. Discover charged me $72 in interest. I called and the rude woman told me that this is how ALL credit cards work. I explained that no, usually if you pay off a card in full before the due date, you don't pay any interest. She stopped short of calling me a liar and an idiot. She said she didn't know what planet I was from, but all her other cards worked just like Discover do. Needless to say, I closed my account. I was going to anyway. I have had the card 12 years and they recently sent me a letter that they were raising my interest from 7.99% to 34.99% for no reason. I have a 786 credit score. This company can rot in h**l.
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Fraud: Discover Card 5% Quarterly Rebate
Posted by PULAOKHAO on 12/11/2007
Be warned that Discover card cheats by not always posting 5% cashback rebate on their quarterly offers. Be sure to check your account and calculate the rebate you are entitled to every month. When you call to complain, you get put on hold for thirty minutes. After several such calls, they finally acknowledged they made mistake and posted rebate. Do not assume they will automatically honor their advertisements.

This happened five times to me. I stopped using Discover; instead chase freedom credit card is much better.
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Posted by Sparticus on 2007-12-11:
Thanks for the warning about this! We recently signed up for one of their 5% promotional rebate programs. We never validated it. I think I will do that today!

Posted by Anonymous on 2007-12-11:
How the cash back works, is that they usually give you back a percentage of how much you charge up every month. For example Discover gives like 2% cashback on gas/food purchases, and 1% cashback on everything else. Just for easy calculation, suppose I charge $500 in a month at various retail stores. Then Discover will give me 1% cashback on those purchases (1% X $500 = $5.00).

Then they 'hold' that cashback amount as a separate balance, kind of like a savings account. Every time I spend money on the credit card, that little 1 or 2% keeps getting added to my cashback balance. It will keep adding up until I tell Discover to do something with it, like send me a check for the amount or use it to shop at online 'partners'.

I think they have certain rules when you can spend your cashback, like I think I had to wait until I had the card for a year before they let me use it. And they only let you use it in $20 increments -- maybe I have $42.66 in my cashback balance, I can only use $40 of it. (These are Discover's rules, I'm sure they vary for the different credit cards).

In my opinion, it's just a way to get people to use their credit card more versus paying cash for things, because your getting this 1-2% bonus for using the card. Now I pay my balance off every month, so this cashack bonus is actually a little extra spending money for me. But it wouldn't make sense to consider this as a 'good deal' if you carry a balance from month-to-month, because the interest they end up charging is a lot more than the cashback they give you.

To me it's all a scam anyway and thank you for the information
Posted by fvertk on 2008-02-28:
Okay, yes, you have to "activate" each "5% cash back bonus deal." Usually they bring it up to you in courtesy calls or card activations. But on some accounts (I work there), they (upper management) won't even let us bring it up. YOU have to bring it up. And you can't even say, "What's my 5% deal?" You have to specifically mention the category and request it. I don't know why that rule is there, and it annoys me as an account manager.

Also, your card gets .25% on your first $1500 on purchases in a year, then .50% for the next $1500 on purchases, and 1% on the rest after $3000. So if you're not a big spender, this is kind of pointless. The 5% is where it's at, just make sure you're on the ball on that one.
Posted by aquasue on 2008-04-14:
You can offer it when ever a call comes in (i work there too). You can also sign up for email reminders that remind you to sign up. You can also call in to the automated system and sign up. Its always a complaint. Before when cardholders were signed up automaticly they thought it was something being charged to thier account so they called in and griped...now ppl are griping b/c they are not automaticly signed up... can we say water is wet syndrome?
Posted by discover card ripoff on 2008-04-29:
Having been a Discover card customer for many years and having been deceived several times by the people at Discover card I would advise that Chase Freedom Card is a much better deal.
Posted by CreditCardAdvice on 2008-05-01:
I work there myself annoys the hell out of me too, with that rule were we cant bring it up that the card member has to mention it( it has to do something with them getting a flyer in the mail for it because I asked my TL) Oh and btw chase freedom card sucks, they have a 250 cap on it wtf.......... at least with Discover its unlimited rewards and there giving you 5% back in different category's, up to 1% back on everything else and 5 to 20% at over 100+ retailers online.
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Will Not Help
Posted by Someday685 on 02/21/2013
Discover card will not work out a reduced payment plan. Over the last few years I had major surgery, was out of work for 8 months, and had physical restrictions for one year at work. The company I work for was later sold and a 5 year pay freeze has occurred with no future increase. At this point I joined a debt settlement law group to work with paying off my credit cards.

Discover refuses to negotiate with them or even me. I was put into collections soon as the debt settlement group contacted them. Its an endless circle with Discover. They will not accept or negotiate a lump sum payment (that is available at this time). They will not even contact me to negotiate. My other credit cards are working with the program.

I am an older person with mild disabilities - where I still work but loose about 4 intermediate days unpaid a month. Help!!!
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Posted by Alain on 2013-02-21:
You could possibly give a try contacting the corporate headquarters of Discover Financial Services (2500 Lake Cook Rd., Riverwoods, IL 60015) at [224] 405-0900 or [847] 317-9480 and see if they want to deal with you. If not, then they'll just have to get paid when you can or not at all.
Posted by Obsfucation on 2013-02-21:
I think it would be great if they would work with you, but it doesn't seem fair to bad-mouth them because they expect you to pay back the money you borrowed from them.
Posted by Slimjim on 2013-02-21:
Credit card issuers HATE debt settlement companies, and Discover is notorious for being very candid about it. I'm sure your DS firm said otherwise, but facts are, lenders don't appreciate outside firms that collect big fees out of their account holders for the purpose of forcing or stoking a default as to try and get the upper hand. I'm glad your other lenders are settling, as it sounds your settlement plan may work out better than average when it comes to success, but when the day is done, Discover is under no obligation to take a dime less than what you owe them and it's hard to fault them otherwise.
Posted by trmn8r on 2013-02-21:
I don't believe Discover has a responsibility to agree to the kind of arrangement you suggest, unless it is in your contract. That is what governs your relationship with the people you borrowed money from. Your personal circumstances are unfortunate, but they does not change the contract.

If the "lump sum" you refer to is the full amount that you owe, I am confident they would accept it. But if you want them to accept less than what you owe them, I can see that would be a definite issue.
Posted by JR in Orlando on 2013-02-21:
The personal problems of a debtor is not the concern of the credit card company. They simply want the debtor to pay what the debtor agreed to pay when the credit card company GAVE THEIR MONEY to the debtor.

While it might be nice if they helped, it is certainly not a bad reflection on them if they do not. Perhaps the OP could seek bankruptcy to eliminate the debt.
Posted by Obsfucation on 2013-02-21:
These DR companies almost never explain to the debtor that for every dollar that gets written off, the debtor has to pay incomes taxes on the amount. Just when some poor schmoe thinks they are getting ahead, they get slammed with a tax lien. Good luck getting the IRS to work with one of these companies.
Posted by Churro on 2013-02-21:
The debtor doesn't necessarily *HAVE* to pay taxes on *EVERY* dollar forgiven. There are exceptions most notably the debt was canceled when you were insolvent. If you do get a 1099-C don't panic. Find a good tax man who will probably be able to minimize a great deal of the taxes owed. Also despite populace rhetoric the IRS will make a deal on taxes especially if you are financially unable to pay them. Happens every day.

Discover is tenacious about collections and is more apt to sue you than any other credit card issuer and they come prepared with complete documentation like no other. And they almost always win judgment and that's when the fun begins because they are just as diligent at collecting their judgments. Don't mess with Discover.

Depending upon your situation you might consider bankruptcy as an option. I know it's tough but hang in there and stay on top of things. Everything will work out in the end. Hang in there.
Posted by Jeff on 2013-02-21:
You know how to get them to start LISTENING to you? Do what i did. Stop paying, and ignore their phonecalls and letters in the mail for a while.....THEN they will start sending you offers to settle the account. Sometimes you have to get mean and play hardball like they do.
Posted by Jeff on 2013-02-21:
Oh and it WILL affect your credit, though so as long as you are not worried about your credit score going down, do what I did.
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Unfair Charging of Fees
Posted by Avpafrfd on 02/17/2010
SALT LAKE CITY, UTAH -- I have been a Discover card holder since 2001 while enlisted in the United States Air Force.
They have been quite helpful in the past, until a slew of recent events involving Discover Card and there account managers have put my relationship with them in serious jeopardy. I understand I am among thousands that have had issues with them and I know that my problem is no more important than the next person. Discover card has led me on, they have called me a liar, and they have charged close to $200 dollars to my account in which they refuse to refund.
Allow me to elaborate..
Back in Sept. 2009 my vehicle was broken into. I lost close to $3000 in personal belongings as well as my personal banking information. I called the police and opened an investigation as well as received a police report. A couple days later I closed my bank account and opened a new one. I had my discover card account set up to debit money monthly out of my account. After closing my bank account I started to pay discover card through my new account manually because I knew they could no longer be paid through my old one. For about 4-5 months I paid discover card $50 a month until I got my life back together. I was never late on payments during this time. Around mid to late December I realized my account balance was going up not down. I knew something was wrong because I was paying almost $20 over the minimum payment. What I found out was that Discover Card was accepting my $50 payment and then charging me a $39 returned Check fee because they were attempting to debit my closed bank account. I called to explain to them what was happening and they handed me off to several different people who were all unwilling and seemed in no way interested in helping me. I explained that this was a screw up and that my records show that I have been paying monthly and that they were still trying to debit an account that was closed. I simply asked that they refund the money from the Return Check charges. They said for me to pay $90 dollars and to call back once I did. So on the 8th of January I paid as requested and about a week later I called back. I explained that I had done what I was asked; now I would like to get my money refunded. They quickly started to hand me off to different account managers that all said they could not help me. During all this they made it very clear that they did not believe my story. I was pretty much called a liar. I have a police report and I can get any information they require from the bank but they were not interested. They took my monthly payment then proceeded to Charge me a $39 fee for returned check because they could. In no way did they attempt to call or inform me of any problem. I was treated very disrespectfully! I was called a liar, and after 2 hours of phone calls and a letter to discover card they refuse to help. They have absolutely zero integrity as a financial institution and they treat their clients/patrons like dogs.
I was given the address to their complaint department because they don’t want to take phone calls from angry patrons to whom they rip off. In my letter I again explained to them that all I want are my fees refunded to my account. They sent me a letter back saying that they received my letter and that they are missing information, they wanted me to call back so they can get the required information to complete their investigation. However, upon calling they informed me that the only reason they wanted me to call is so that they could tell me that they will not be assisting me with my problem. So again they misled me to believe they were willing to help and again they showed there true colors.
The only thing that will resolve this issue is a refund of all fees taken from my account from Sept, 2009 – Feb. 2010.
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Posted by goduke on 2010-02-17:
To Discover's defense, a number of people set up an autopay for the minimum balance, and then pay an additional amount to try and bring down the balance when they can.

Doesn't justify rude or dismissive behavior, but I don't think you can say they should have known your bank info was stolen and therefore shouldn't have tried to autopay the account. Honestly, it was kind of your responsibility to turn that off when you closed the one account. Hopefully they'll understand what happened and reverse the fees, but you really sort of have to accept a bit of responsibility for not picking up on it for a long time.
Posted by Anonymous on 2010-02-17:
Yeah, The OP should have stopped the auto-payments but after the first one Discover should not have attempted any more since when an ACH transaction is returned there is a reason code given which in this instance would be R02 - 'account closed'. The subsequent attempts was either a gratuitous attempt by Discover to garner 'free money' from one of it's cherished customers or Discover has some really bad software not capable of interpreting a three digit code. I'm inclined to think the software is A-OK.

avpafrfd, Regardless of the outcome of this issue never forget how Discover treated you. How little they value you as a customer. Remember today, tomorrow and forever. Don't ever do business with them again. Trust me they need us the customer more than we need them. Good review!
Posted by goduke on 2010-02-17:
They probably also should have called a good customer and said "hey...what gives."
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Deceptive Balance Transfer Rate
Posted by Ericaj on 02/10/2010
February, 2010: Discover Card advertises "transfer your high-rate balances to a lower rate" and offers a 6-month balance transfer rate of 9.99%. After this six month period, Discover informs you, the rate for the transferred balance jumps to the standard rate for purchases. Notwithstanding the somewhat high initial balance transfer rate, this seems pretty standard.

However, the current interest rate for purchases is only 12.99% (on Discover Card, anyway), and, if you're not careful you'll miss that Discover is also charging an immediate "transfer fee" of 5% of the total amount transferred. Note that there is NO UPPER LIMIT on this 5% fee. So, if you transfer $5,000, you immediately pay $250 in fees; if you transfer $10,000, you immediately pay $500 in fees. Effectively, you're paying 14.99% to start on this balance transfer "deal", which jumps up to 17.99% after the six-month "deal" period expires.
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Posted by Venice09 on 2010-02-10:
Nice job picking that up. If more people paid attention to detail, banks would get away with less.
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So I called Discover to pay off my balance and close account
Posted by ScrewedByDiscover on 01/15/2010
I called Discover to close my account. I asked how much I owed to close everything with them. I paid the amount and what did I get in the mail 3 days later? A bill for the finance charge of the month. I called and they said, "Well they should have added that to your balance". No budging on this after they just raised my rate from 8 percent to 18 percent. I was a loyal customer for 8 years and they screwed me twice before I left them.
Also, I had accumulated 30.oo in bonus back money. Since its not at $50 I could not use that to my balance. Screwed again! Ok, so now I have to get a gift card. I will take the Lowes hardware store gift card, NOT you must have $45 to get that card. Screwed again!

I hate Discover and have to admit I dream about doing bad things to them. I would never go that far but I understand if others do.

I plead with everyone to never do business with Discover. They will screw you royally.
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Posted by Anonymous on 2010-01-15:
When you close revolving credit, they can only give you the payoff for that day. The balance continues to accrue interest until they receive the payment, so you'll always get one final bill with the remaining interest. That's just the way it works.
Posted by bunnyhead on 2010-01-15:
Credit cards are just bad news. Everyone really needs to wise up and just stop using them.
Posted by Fufu487 on 2010-01-16:
plus that statement was probably already on the way in the mail if you only received it three days after paying them
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Misled by Cardmember services
Posted by BigPhrank on 11/12/2009
Let me preface my review by stating that up until this incident, I had been an advocate of the Discover card. I was laid off in February of this year and hadn't secured employment. In April, I contacted Discover regarding my account to see if there was any assistance they could offer regarding my monthly payment. The representative I spoke to was quite helpful; or so I thought at the time, and advised me she could place a 'freeze' on my account, which would not allow me to use my card for 6 months, and pay a lower interest rate so more of my monthly payment would go towards the principle. Since I am a firm believer that if something sounds to good to be true, it usually is, I asked and verified several times that if I did this, after the six month period the card would then automatically be reinstated without penalty. I ended the phone call on this premise.
Time past and in September I thankfully acquired employment. I contacted Discover to let them know I no longer needed the account to be frozen and was advised by the representative to just ride out the six months at the lower rate. I was again reassured the account would be reinstated at the end of the six month period.
I waited until November which was the end of what I thought was the six month period and contacted Discover regarding to make sure my account was reinstated. I was advised I had to wait until November 30th exactly because that would make the exact six month mark. I did so. When I called Discover back, much to my dismay, I was told they would not be reinstating my account and it would remain as suspended. I went back and forth with the representative on the phone who advised me during the time my account was frozen, policy and procedure had changed and they reviewed accounts and individuals credit reports prior to reinstating them. The representative stated I had too much outstanding debt and Discover would not reinstate my card at this juncture in time. All this despite the fact that I had no issues paying the same monthly payment I had always paid, had never been late on a payment, and had an account in good standing with them for close to ten years. I requested to speak to a supervisor because it is my understanding that if a new policy or procedure is set forth, it cannot be backdated or applied to issues that existed prior to the implementation of the policy. Also, I was never told of any review or redetermination at the inception of my agreement with the initial representative. I was told the supervisor was out to lunch and I would have to wait up to 24 hours for a call back. I did so, and when the supervisor called me back I simply got a reiteration of what the representative had said. No consideration, no assistance, nothing. Even when I stated I was seriously considering either closing my account, or seeking legal assistance, my statement was met with indifference.
I still don't understand how they can implement and apply a new policy without notifying their customers. As I stated to both the representative and the supervisor, if I would have been told at the beginning that my account was being suspended and I would have to be subject to a review at the end of the period to determine if my account could be reinstated, I would have NEVER agreed to freeze my account as I was told initially.
It is a shame that in today's society, we are so dependent on credit, credit rating, credit worthiness. We are gravitating more towards a money-less society each day without realizing the implications it brings with it. I'm not sure how; if at all, this review will help anyone. All I can say is be wary, be very wary of credit card companies. These are my three cents.
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Posted by skelly39 on 2009-11-12:
Everybody, even people who don't have credit or money problems, is facing the same treatment from their credit card companies. If they aren't going to unfreeze your account, why wouldn't you just close it? It's better that you close it than them. You are right-they are required to notify you of any changes in terms and conditions. Are you sure you didn't receive something with your bill? Sometimes they like to slip those things in there. They are easy to miss.
Posted by JR in Orlando on 2009-11-12:
I'm not sure this is a change in the terms and conditions. Under the contract, surely they have a right to terminate the card at any time. It is at their discretion how often they review the debtor's status. Whether they did not review (as before) or whether they did (as now) when they are reinstating a frozen account sounds like an internal policy, for which no notice is required. Obviously people who have their accounts frozen have financial issues.

Posted by skelly39 on 2009-11-12:
Good point, JR. Wouldn't they still have to notify him though?
Posted by MaggieMcT on 2009-11-12:
They don't seem to be disputing that he was told it would be reinstated. They should honor that. But do the words "credit card company" and "honor" belong in the same sentence?
Posted by JR in Orlando on 2009-11-12:
I would not think so, since it is a question of how the terms and conditions are to be enforced by the credit card company, not a change in the terms themselves. Say Discover routinely checks everyone's credit report once a year, but changes then to once every six months. That is not a change in the terms regarding their right to check such reports, only an internal decision as to how often they are going to exercise that right and check the reports.

I guess the equivalent would be a debtor who normally pays the minimum payment, one day prior to the due date. If that person then begins to pay 3 times the minimum, and pays it twice a month, they can exercise their right to do so without notifying Discovery of their payment change.
Posted by JR in Orlando on 2009-11-12:
The language used by the op states: "the card would then automatically be reinstated without penalty." I read this as informing the person that no penalty would be imposed when it is reinstated and the person would not have to reapply for the card; Not that the person gets the card back even if he no longer meets the requirements for the card.

Under the poster's interpretation, even if he went bankrupt during the 6 months, he would be entitled to have the card reinstated without regard to his financial condition. That is an unreasonable interpretation.
Posted by Mizu115 on 2009-12-24:
When I lost my Wells Fargo credit card, they refused to reinstate it as well telling me they had done a "review" and then simply said my card could "not be issued at this time"..So, it's not necessarily because you suspended your account..They check your credit report whenever you do anything that raises a red flag. I was really angry and frankly was insulted that they assumed I would have bad credit just because I lost my card. It's not like I reported fraudulent use, just lost the card. So, it's not because you suspended your account..They check your credit always before sending you a card for any reason.
Posted by adam2106 on 2009-12-27:
It is quite a shame that companies like Discover can take advantage of a situation in which they somewhat started. You are completely right that they mislead us because they say everything will be fine when it comes to refunds or disputes yet when we try to argue and try to reason with them they block us out. Of course some people will have positive effects but given in this awful time in the economy and Discover receiving billions of dollars from TARP as well as from the FED’s window they should be able to help customers in need. Customer service should be taken seriously. Unfortunately it is not, which is a shame. I have a bad situation with them and they just don’t seem to care.
Posted by We are twins! on 2012-05-03:
I had the EXACT same thing happen to me. I was a customer since 99, was laid off, had the payment plan for hardship deal going on and called them once I found employment. I paid off my debt completely and they STILL said that I could not get out of the suspension! That sucks that they don't tell you that once you let them know you're in trouble, there is no way out of the ditch. Thanks for sharing your story.
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Using power to hurt the little ones!
Posted by Don'tDiscover on 07/28/2009
I have been a customer since 1989 and now facing a civil suit with Discover. My account has been closed for 6 years but can not pay off the amount. Every month interest raises till its 29%, late charges and over the limit charges. Tried to reasonably pay off but would not agree to lowering the amount by een a penny. When I no longer could make payments the $2500.00 bill jumped to $6300 in less than a year and to top it off added $969.00 for the last month before starting a law suit. How is it legal for anyone to charge smeone such an ungodly amount for no service at all!!!!!! They can throw any dollar amount on to our bill for no reason and the courts agree!!! No one but large corporations can do this!
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Posted by goduke on 2009-07-29:
Interest and penalties can add to the balance on a credit card very quickly, especially when they've been racking up for 6 years. Kind of odd that Discover didn't default it after 18 months or so, but I've never dealt with them.
Posted by aba2415 on 2009-08-01:
your account has been closed for 6 years. how would you expect them to lower your interest rate, waive fees/finance charges, etc if you are no longer a cardholder??
Posted by blackroseandkosmos on 2009-08-05:
same thing happened to me with american express if you have proper documentation of what they have been charging you


they helped me with HSBC and helped me return nearly 3500 dollars while they faced nearly 175,000 in fines
Posted by mary leigh on 2013-09-17:
Oh I charged 900.00 in 1993. Now they want me to pay $2500. I skipped 2 pymnts a few mos ago. I was trying to pay it off when they went wild.
Posted by mary leigh on 2013-09-17:
how to contact the office of comptroller General of the currency.
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28% interest rates
Posted by SCREWED by Discover on 07/03/2009
How can a company this size go BROKE? Ask for bailout money and then charge the American people 25 to 35 % interest on their cards. Its sad but more so SICK to take our money (bailout) and then let us use it at 28% interest..The government should have let them go and just dissapear.. the CEO should have been fired and all of the board members with him.

Discover credit card company seeks a piece of the bailout pie
by Malia Spencer
Jan 20, 2009
The Riverwoods-based issuer of the Discover credit card is trying to tap into more than a billion dollars in federal funds by virtue of its imminent transition to a bank holding company. But Discover Financial Services LLC insists that this is no bailout, for it remains healthy and is merely looking to boost its already strong capital.

Discover Financial already has been approved by the Federal Reserve Board as a bank holding company and has received preliminary approval to participate in the U.S. Treasury’s Capital Purchase Program, which was launched in October by the government as a way to encourage financial institutions to build capital and in turn make loans to businesses and consumers.

According to Securities and Exchange Commission filings, Discover is seeking to sell to the Treasury shares of preferred stock and warrants to purchase shares of common stock for an aggregate price of about $1.2 billion.
The preferred stock would pay a cumulative dividend of 5 percent annually for the first five years and then jump to a 9 percent annual rate.

Becoming a bank holding company not only allows Discover to apply for the federal funds, it opens up new business possibilities. A bank holding company may own more than one kind of bank, noted Jon Drummond, senior manager of corporate public relations. The company already owns two subsidiary banks in Delaware, Discover Bank and Bank of New Castle. Now it wants to acquire more consumer and business deposits, and, Drummond observed, it could purchase more banks as a way to accomplish that. But he cautioned that the company has not made any statements on what it is planning to do.
However, Michael Kon, an analyst at Morningstar Inc., said he doesn’t think the company is in the market to purchase a bank because growth in deposits could be achieved through its existing banks, utilizing its strong online platform.

The Riverwoods company primarily operates as a credit card issuer, but also services third-party payments and offers other loan products. In 2008 the company had net income of $927.8 million, or $1.92 per diluted share, up from $588.6 million, or $1.23 per diluted share, in 2007. The 2008 results included a $135.2 million loss from discontinued operations. Discover sold off Goldfish, a U. K. credit card business, to Barclays Bank PLC in March.

Discover takes deposits at its banks including money market accounts and certificates of deposit. Additionally, the company offers installment loans such as personal and student loans. At the close of 2008 it had $49.7 billion in loans, up 4.9 percent from $47.4 billion in 2007.

Revenue generated from bank deposits are used to finance Discover's credit card and installment loan businesses. At the close of the fourth quarter, which ended Nov. 30, the company had deposits of $28.5 billion. Additional funding for business activities comes from the process of asset securitization, according to the company.
Though profit for full year 2008 was up from 2007 it is still below the level of 2006, which saw net income of $1.1 billion, or $2.26 per diluted share.
Most analysts who follow Discover are advising investors to buy or hold the stock, although there are also two sell ratings. The stock closed Tuesday at $7.01, down 95 cents or 11.9 percent. Financial stocks were hit hard by investor reaction to the government's revised bank bailout plan.
Discover's stock 52 week high was $19.87, its low $6.59.
Kon of Morningstar says the stock has a fair value of $30. He recommends investors consider buying shares at $15 and consider selling them at $60. The stock has Morningstar’s highest rating of five stars.
The company is “making the right decisions and I think they are going to perform well once the economy improves,” Kon said in a phone interview.
“They made good decisions before this downturn,” he noted.
Among those good decisions, Kon said, was staying away from certain geographic areas, such as California and Florida, which have seen the worst of the housing crisis.
Nevertheless, its loan losses increased last year, and Discover greatly augmented its loss reserve.
By the end of 2008 the reserve increased to $1.4 billion, up 81 percent from $759.9 million a year earlier. Net charge-offs for 2008 totaled $981 million, up 44 percent from $677.9 million in 2007.
“The next year will probably see continued increase in loan losses,” Kon said. “The environment is deteriorating and they are facing a lot of economic head winds. Credit card volumes are under pressure with the slump in consumer spending.”
However, the company’s debit card portfolio should remain strong as debit volumes are growing faster than credit cards, he said.
Discover’s participation in the federal Capital Purchase Program will strengthen the company’s capital position, officials said, while pointing to the company's already-strong balance sheets.

According to the company’s SEC filing, Discover Bank and Bank of New Castle exceed the capital requirements of the Federal Deposit Insurance Corp.
On Nov. 30 Discover Bank had total capital to risk weighted assets of $4.3 billion, or a 12.9 percent ratio, in excess of the required $2.7 billion or 8 percent. The smaller Bank of New Castle had $15.5 million, or more than 400 percent compared with the required $279,000, or 8 percent.
The parent company's year-end stockholder equity was $5.9 billion, or 15 percent of average total assets.
The added capital from federal funds can be used to replace the company’s previous dependence on the securitization market, which has stalled in the current credit crisis.
Applying for government money makes good business sense in a difficult market, according to some analysts.
Christopher Brendler, of Stifel Nicolaus, said Discover is a prime candidate for government support.

“It doesn’t hurt to have extra capital on hand to handle losses,” he said.

Other credit card companies, such as Capital One Financial Corp. and American Express Co., have already become bank holding companies, Brendler said.

Shifting to a bank holding company is not expected to alter the company’s operations, Discover’s Drummond said, but will merely bring in different regulations and bring the company under the oversight of the Federal Reserve.
The Chicago Federal Reserve Bank, which oversees the Midwest seventh district, will supervise Discover as a bank holding company. The Chicago Fed already oversees 975 bank holding companies, said Doug Tillett, vice president of public affairs.
Chicago Fed officials look at a company’s risk management, the board and senior management oversight and policies and procedures. Federal regulators will also monitor the holding company’s financials such as asset quality, capital, liquidity and earnings, Tillett said.
Receipt of Capital Purchase Program funds will not be the first infusion of federal dollars for the company. Discover Bank has already been to the Fed’s discount window and borrowed $1 billion over the course of two visits, once in November and once in December.

However, analysts at Fitch Ratings Ltd. are more reserved in their opinions of a non-banking financial firm’s converting to a bank holding company, especially because, they say, stricter Fed regulations may be coming.
“Fitch does not view BHC status as a panacea for the current economic and credit cycle,” the firm reported recently. “While BHC status may provide additional protections in the current environment such as capital boosts and debt guarantees, these firms will remain challenged by weakening economic conditions and business model changes.”

Discover (DFS) to receive bailout funds
Posted Jan 16th 2009 12:48PM by Brent Archer
Filed under: Good news, Industry, Options, Technical Analysis, Financial Crisis
Discover Financial Services (NYSE: DFS - option chain) shares have moved higher today after the company announced it has received approval for a $1.2 billion in funds under the government's financial sector bailout package. DFS plans to become a bank holding and a financial holding company in order to receive the funds. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on DFS.

DFS opened this morning at $7.83. So far today the stock has hit a low of $7.61 and a high of $8.10. As of 11:55, DFS is trading at $7.67, up 6 cents (0.8%). The chart for DFS looks bullish and S&P gives DFS a positive 4 STARS (out of 5) buy ranking.

For a bullish hedged play on this stock, I would consider a February bull-put credit spread below the $5 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 4.2% return in just five weeks as long as DFS is above $5 at February expiration. Discover would have to fall by more than 34% before we would start to lose money. Learn more about this type of trade here.

DFS hasn't been below $5 at all in the past year and has shown support around $7.40 recently.

Brent Archer is an options analyst and writer at Investors Observer.

DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in DFS.
Tags: bailout, DFS, Discover Financial Services, DiscoverFinancialServices, Investors Observer, InvestorsObserver, options

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Rate Increase
Posted by VANEPS on 05/06/2009
Discover Card raised my rate from 5.74 to 13% with no late payments in four years. I will cancel and even if it lowers my credit score I will have the satisfaction of telling them where to place their card. This is ridiculous and just an example of what any of you can expect if you accept any offers from these crooks.
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Posted by MandyCakes on 2009-05-30:
Lol. If you look at your statement three years ago before prime rate dropped to 3.25% you probably had like a 12-13% guarnteed.

I promise you did not have a 5.24% before the economy got where it was. You didn't earn that rate by your good credit you received it because people aren't paying their bills.
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