Getting Personal
A bad credit card experience
Question: I just had an extremely frustrating conversation with my credit card company (Bank of America). I wanted to get your thoughts. Larke, Washington, DC
Answer: Larke sent us a long email, a self-described "rant." It details an all too common experience with government bailout-gorged credit card issuers. His case involves Bank of America. It raised the credit cards interest rate and cut the line of credit.
A couple of personal finance points: First, Larke is doing the right thing: Paying off the card in full. The beauty of capitalism is that you don't have to do business with companies that mistreat their customers. Second, everyone with a credit card should be prepared for a similar experience. It may not happen to you, but just as mailboxes stuffed with unwanted credit card solicitations was the bane of our financial existence only a few years ago, now hiking rates and slashing lines of credit is normal business practice. Be prepared. Third, don't volunteer to your credit card issuer that you've been laid off. In their business model, you've gone from a good customer to a high risk customer. Period.
Now, over to Larke's story. It needs no further comment:
I called BOA to try and get my interest rate down on my credit card. I have made this type of call in the past when I've been comparing offers from other credit card brands/banking institutions. In this situation, I was trying to use my current unemployment situation as leverage to get my interest rate lowered (i.e., I wasn't just shopping for a lower interest rate, I really thought that there wouldn't be an issue to lower my rate by a reasonable, appropriate amount; I was still riding the mortgage rate reduction train, I suppose).
Not only did the senior credit analyst not lower my interest rate, she cut my line of credit because I was just laid off. Instead of having a cushion of $10K, I now have a cushion of $500. Twenty minutes ago, if I never made the call, my limit would have remained the exact same as it was last night. I also just heard that BOA is experiencing gains. Great. So, BOA got to be irresponsible, get a slap on the wrist and now, can't possible lower someone's credit card rate by 2% (I do understand that rates are based on prime/t-bill calculations so I know that certain rates are just unrealistic, but I don't believe my request was unrealistic).
So, I got humiliated through a job lay-off and now , in trying to be responsible, my credit card company is reducing my credit (I have excellent credit history, always made my payments, own a house, etc.).
They offered me some kind of debt reduction program (a 5 year payoff program) - but I'm pretty positive that will end up costing me more in the long run. So, I'm just going to pay the card off, asap.
Thank you so much for reading my rant - I thought the bank's were supposed to be flexible. I'm very frustrated!
Search
Looking for guidance on your personal finances? I'm taking your questions and answering one here each day. Just click on the "Ask a question" link to tell me what's on your mind.
Chris Farrell Marketplace Money personal finance guru
Categories
- Banking
- Books
- Budgeting
- Charitable giving
- Credit cards
- Credit counseling
- Credit report, credit score
- Debt
- Dollar exchange rate
- Economy
- Estate planning
- Financial planner
- Housing
- Insurance
- Investing
- Kids and money
- Mutual funds
- Other
- Paying for college
- Retirement
- Retirement savings
- 401k
- Bonds
- IRAs
- Money markets
- Mutual funds
- Savings
- Scams
- Social Security
- Taxes
- Vacation
- Work
- cars
- graduate school
Hot Topic
Latest Posts
Archives
| S | M | T | W | T | F | S |
|---|---|---|---|---|---|---|
| 1 | ||||||
| 2 | 3 | 4 | 5 | 6 | 7 | 8 |
| 9 | 10 | 11 | 12 | 13 | 14 | 15 |
| 16 | 17 | 18 | 19 | 20 | 21 | 22 |
| 23 | 24 | 25 | 26 | 27 | 28 | 29 |
| 30 | 31 |
sponsor
Latest Comments
- Tax-exempt bonds vs. taxable bonds (1)
- Eric Vanhove wrote: So, if there are calculators on the net, why should we be reading your blog? Geez, give us the form... [read]
- Buying a few shares (2)
- Manuel Mihalas wrote: I would recommend you minimize your trading cost as much as possible. There are many low cost tradin... [read]
- Bob wrote: I just enrolled my 17-year-old in a no-load Roth IRA that requires no minimum contribution. There a... [read]
- CDs (2)
- Mark wrote: According to this, you can withdraw all of your money penalty free after 6 days, and still get the i... [read]
- mei wrote: Can’t state enough how important the sacrifices that go into wealth creation are. Curious if anyone... [read]
- Home equity line of credit (3)
- Bruce wrote: I disagree about using a credit card unless you plan to pay it off quickly. Especially with credit ... [read]
- DJ wrote: Using a cc is not most sensible option. My financial "guru" would never recommend using a cc that yo... [read]
- Variable annuity (1)
- ann hancox wrote: I took Chris's advice and also agree, they are expensive and once fit my life style. I recently cas... [read]
sponsor
Comments (6)
March 13, 2009 9:05 AM PT
Larke is a bit of a fool. He called an unsecured creditor and told them he is out of work?
Let's say Larke had a deal with his buddy where the buddy could borrow money any time he wanted and pay Larke back.
Now if the buddy comes up to Larke and says, "Hey, I lost my job and no longer have any income" is Larke going to keep the "borrow money anytime you want" offer open?
I didn't think so!
March 14, 2009 6:22 PM PT
Anonymous: It is more like this.
Lets say you had a buddy , and the buddy could borrow from you any time you wanted.
Then you met some kid down the street who said he could pick horses at the racetrack, so you bet 35 times more money than you actually have that a horse would win. The horse dies the next day.
Your rich parents call you up, and agree to help you out. Then you call them back next week, asking for more money, because you never really kept track of how much money you bet on the horse, and you really need a bunch more than you said at first. Then your parents agree to give you even more money.
Then your buddy down the street comes up to you, and tells you he lost his job. He is having problems buying food and clothing.. can you just lower his interest rate a little bit?
Then, you, say "oh no, of course not. i cant risk any more money". then you go back inside, sip crystal and watch your 80 inch plasma screen your parents bought you, while your neighbor tries to boil shoe leather to make stone soup.
March 13, 2009 4:18 PM PT
Anonymouse, you dont' know anything about Larke, how can you call him a fool? He may be a terrific credit risk for a credit card company even though he got laid off. How do you know he doesn't have $1 million squirreled away?
As for CC companies, I have a great FICO, I am working and always pay my balance off, but my CC company is raising my rates too. Why I have no idea, but I'm cancelling the card because of this. Hey cash is always better anyways.
March 13, 2009 5:51 PM PT
I use my credit card like a debt card. If I don't have the money to pay the card off at the end of the month I don't use the card. One month out of years of monthly I forgot to make the payment. When I received the bill the next month I realized my mistake and set up the payment on their payment web site for the day before it was due. A few days before that date BoA called looking for their money. The script the lady was working from made me feel like a dead beat. She sounded embarrassed when I furnished her with the pending payment transaction code. I am about to dump BoA for a card at a Credit Union at half the rate.
March 17, 2009 6:20 PM PT
Athough this man was naively honest in his report to his creditor, he was following the most oft-repeated advice of the so called credit experts.
I have good credit and I have had some experiences with BOA that were anything but good. In fact, I think that they are the most mercenary banking organization in the US today.
The best advice I can give is get out from underneath them like I did: I transferred my balances for the credit cards both I and my husband had, I refinanced my mortgage when then took over Countrywide Home Loans and whenever they offer $50 or $100 to "open a new checking account" I do, then collect their bonus and close the account. I figure it's the only way I can get anything back from the bastards.
March 25, 2009 8:06 AM PT
Good luck to you Larke, I hope things work out. On the flip side, I still have my job, three great FICO scores, a house, pay my bills on time every month, have money in the bank...and I ALSO got notices from Citigroup telling me they were upping the interest rate on two credit cards to usurious amounts. The legalspeak in the notices seemed to indicate I could either accept the increases or challenge them, so I did the absolute best thing...I invited Citigroup to take a hike. Sad thing is I really enjoy their 'marauding viking' TV spots, but right now that ad campaign seems to have a touch more reality than we would like.