When the interest rate reverted to the bank’s standard rate after six months, Kiri complained. The bank did not accept she had been told she could apply for an extension of the 4.99 per cent promotional rate, but, as a gesture of goodwill, it offered to continue the rate for another three months. Kiri wanted the 4.99 per cent rate indefinitely and complained to us.

She also complained about one of the accounts she had opened for her four children. As she recalled, all the accounts required her and the relevant child to authorise any withdrawals. Kiri deposited $5 each week into each child’s account. She was shocked to discover that her teenage son had withdrawn $1,400 from his account and bought a car, which was written off in an accident. 

The bank offered to reimburse the $465 she had put into her son's account, plus $135 as a goodwill gesture, bringing the total to $600. Kiri wanted the bank to compensate her son for some of the money he had lost, but it declined to do so because the signing authority allowed him to withdraw money without her signature. She complained to us about this too.

About the same time, the bank issued Kiri’s teenage daughter with a debit card and she withdrew money from her bank account. The bank agreed it should not have issued her daughter with a debit card, given the signing authority on that account required her and her daughter to authorise withdrawals. The bank offered to reimburse the $500 her daughter withdrew, an offer Kiri accepted.

Our investigation

We discovered the bank had charged Kiri the wrong interest rate on the $3,000 cash advance. It applied the promotional rate of 4.99 per cent to the existing balance, but  charged her 17.9 per cent on the $3,000 cash advance. The bank accepted Kiri should have paid 4.99 per cent on the entire balance and offered to reimburse the extra $231.91 she had paid over the six months.

The extra interest had flow-on effects the bank also offered to reimburse. Kiri had set up an automatic payment to meet the minimum payment due on the card, but the extra interest meant the automatic payment wasn't enough to meet the payment, and Kiri was charged a $15 late payment fee each month. The bank offered to reimburse the $90 in late payment fees.

The bank calculated that its three-month extension offer would save Kiri $219.72 in interest, and it said it remained prepared to offer this as part of a settlement.

We checked the signing authority Kiri completed when opening her teenage son's account and confirmed that her son had the authority to withdraw money without her signature. Her son's bank statements showed he had deposited $1,400 into the account the day before he withdrew it.

Outcome

On reconsideration, Kiri decided to accept the bank’s offer of $600 in relation to her son's account, and also the $541.63 settlement in relation to the credit card.