Ask Mr Credit Card's Blog » Credit Card Horror Stories

Reader Feedback on Citi’s Customer Service

Mr Credit Card — Thu, 29 Oct 2009 15:06:49 +0000

This is an email I just got from a reader telling about her bad experiences with Citi. I’ve decided to publish this for all to see. One of the things you realize is that credit cards are not just about rewards but customer service. If you wish to share any of your credit card experiences with us, please feel free to use our contact form.

You carry a good review for CitiCards programs, and while the initial agreement may be competitive and seem favorable to pursue, once you are in their program, that changes rather frequently and dramatically.

I transferred several balances about 2 years ago, and do not use a credit card on the account. I only pay down the debt. Every month, there’s a huge problem with on line payments and payment postings. Sometimes it’s a website down for maintenance on a due date, or a change in payment cut-off times. (I’ve seen 3 unannounced changes so far: midnight, 5:00PM, noon…you never know what you find on their website. I pay all my bills on supplier’s websites…they are not the norm of what you find on line.) Every month they either change payment dates or payment posting date and do not inform me.

Citicards no longer posts your payments the same day, even though my bank withdraws the funds immediately, and they have in the past. I have 2 other credit cards, nobody does this. Their website doesn’t disclose the delayed payment posting date. It varies between 3-5 days. Can you imagine the revenue they generate from this float and subsequent late charges and increased interest rates? With all the new consumer credit laws, this feels very unethical and nearly illegal.

This is fairly new, last 2-3 months, and they don’t inform you of the changes. My payment confirmation shows payment date, and no information about float on the payment posting. So now, if I log on before noon to pay the bill on the due date, they add late charges (in the category that never gets a payment posted against it), and bump up the interest rate. If it was discolosed on the statement and/or website, or if a notice was sent out describing the change, I could have avoided the significant rate increase and late charges, and better understood their new policy…absolutely nothing from them arrived by mail, email, or webiste information.

Also, I opted out of a rate increase this Spring. I did it by phone – it was an option of notification – I know date and who I spoke with. Their notice was ridiculous, there was no “important handling needed by ___date”, it purposely looked like junk mail that could easily be overlooked and thrown away. They will not roll the rate back…my interest rate has now tripled. I am working through customer service…they are a substandard “joke” to deal with.

Every month there are new payment due dates, new (undisclosed) rule changes, and later postings.

They have frustrated me beyond belief, and if I ever heard of a class action suit against them, or a way to sue them individually, I would jump all over it.

Prospective clients considering their accounts should be strongly warned about their payment practices, and lack of capability in customer service and documentation. Any opportunity to steer people away from this credit company is strongly suggested.

Ms. Susan Guffey

CitiBank Closes Shell Credit Card Accounts

Mr Credit Card — Sat, 24 Oct 2009 10:48:26 +0000

There were various news reports out in the mainstream press that Citibank has closed accounts on their Shell MasterCard. Apparantly, it started happening on Wednesday. Many cardholders claimed that they never received any letters in advance and found out when they actually tried to use the card.

Citi also confirmed in a statement issued saying they did close accounts of “co-branded gas cards” like Shell, Philips Conoco and Exxon Mobil. If you read the comments in these posts on the mainstream media, a couple of things become very clear.

Many of these accounts have good credit and even paid their bills in full

After much probing, a couple of Citi supervisors did admit that the account was closed because it was not profitable.

Here’s my take on why Citi is doing this. They are IMO closing accounts that are not profitable. How so? Most of these co-branded credit cards like Shell Mastercard pay 5% rebates when you buy gasoline from Shell. These cards do not have any annual fee. Now, I bet that many cardholders simply use their cards for Shell gasoline, charge a couple of hundred dollars a month and even pay in full. Some have even been customers for 20 years. But if Citi has to pay out 5% rebates but can only earn less than that on merchant fees, then that becomes a losing proposition for them.

That is the reason many gas credit cards have reduced their rebates. For example, the Discover Gas Card no longer pays 5% rebates on gas. They have reduced that to 2% and they put an annual gasoline spending cap on that. Amex Costco have also put annual spending caps. Chase Freedom went from 5% gasoline, supermarket and drugstore rebates to 3% rebates on “rotating categories”. Fact of the matter is that the good old days of straight up 5% cash rebate cards with no tiers or caps are over.

Citi may still be accepting application on their Shell MasterCard. I just checked their website and they are still offering 5% rebates on Shell gasoline purchases. But I’m willing to bet that if any new cardholders simply uses the card just for gas to earn the 5% rebates, they get their account closed as well!

If your Shell card has been closed, please share your story and opinion.

Even Sub Prime Credit Card Issuers Are Closing Accounts!

Mr Credit Card — Fri, 23 Oct 2009 14:22:22 +0000

Just when you thought the likes of Chase, BOA or any of the big boys in the credit card world were jacking up rates, cutting credit lines and forcing many cardholders to turn to apply for sub prime cards (cos their credit have become subprime), here’s some emails to me demonstrating that even the sub prime issuers have gotten into the act. Here’s a few emails we got from our readers.

i had a tribute card for a year never late /i would like card like that if i can/they clse down is it any way i can get a card from delware bank

mrs rubye amos

I had a credit card from First Bank of Delaware (Imagine Card). They transferred my card to thier Tribute card because of “my good payment and usage history”. I just got a letter from Tribute card that the FBoD has closed my account. When I called the number on the letter, FBoD has decided to terminate their credit card program but “it has no reflection of my account, credidt or history”. Now it shows on my credit as “closed by bank”. What do I do now?? I am still responsible for my balance, which admittedly is low but it puts a black mark on my credit…any advice??

Dana Madera

tribute credit card or first bank of deleware has cancelled all of their customers accounts. Are they allowed to do this? not everyone was giving notice of the cancellation, some of us received credit increases just days before this happened. they did not give any notice that this was going to happen at all.

Is a class action lawsuit the way to go for the customers?

t smith

I had a Tribute Bank credit card with $850.00 credit limit. They gave me an increase and about 2 months late I went to purchase something with it and was told the card was declined. I then called Tribute and they told me that the account was closed because they were no longer doing Master Card. What do u suggest I do. I also want to know what it means when it says you have a 25 day grace period. Grace period for what? I don’t understand that.

Ms Cheryl Horn

I had a tribute master card and the limit was $600.00 This took three year to come up to this I was never late in any payment. After I payed off my balance they drop my limit to $225.00 You pay the off the fees and have as you state $180.00 credit limit remaining I had this card almost three years and they close the account on me why. Could you please explain what happen to me.

Rick Stewart

My thoughts – What can I say? Even Compucredit, the firm behind Tribute and Imagine credit card have gotten into the act. I guess their credit card default rate must be creeping up and that all the extra layer of fees they charge is not enough to compensate for that. What can you do if your card was canceled by them? Well, I would make sure all the fees and interest are paid off. If you have this card, chances are that you did not have great credit to begin with. If your credit is still poor, I would suggest getting a secured credit card instead because it is cheaper that all these cards and you almost face no risk in getting your credit lines declined because it is a secured card.

If your credit has improved, you could certainly try to apply for a regular unsecured credit card. I would not worry too much about the impact on your credit score if these accounts are closed because most will not have high limits or a lengthy credit history with these cards.

Please share your story if your account has been closed by one of these issuers.

Money Strategies For The Recession

Mr Credit Card — Sat, 25 Jul 2009 10:56:25 +0000

I’m off to the beach today since it is going to be a sunny Saturday at the shore. The weekends are usually days where I take a break from writing about credit cards. So in my place, here is a guest post from SVB from The Digerati Life, one of my pf blog buddy.

The recession we have is still ongoing but here’s a question for you: have your savings plans changed because of this economic downtrend? For a lot of people, they’ve decided to make changes to their savings and investment plans in response to how the economy has been behaving — and it’s hard to blame them when their retirement funds have suffered a mighty blow over the past few years.

While a lot of experts say we should stick to our current plans, I believe that when the financial environment tests our strategies, we should be flexible enough to reevaluate them and see whether they need further tweaking. Here are actually some of the considerations I’ve been making during this recessionary period, which I believe will set up my portfolio for much better days ahead.

5 Money Strategies for the Recession

1. Manage your money in a low interest environment.

It’s a little frustrating to see how our cash holdings are earning anemic returns these days. In my case, my money market fund is barely eking out any sort of return. Even high interest savings accounts are no longer as high yielding as they once were. If you’ve got extra cash, you’re probably asking yourself where’s the best savings account for your funds. In my opinion, an online account is a great option because internet only banks are able to cut down on costs and pass on these cost benefits to customers via higher yields.

2. Seek out cost efficient financial institutions.
Banks can have sneaky bank fees while brokerages and fund companies can easily hit you up with transaction fees. Even if you’re investments have a great rate of return, you don’t want them eaten up by high cost funds or commissions. Why not check out this list of best online brokers for some low cost options? You may want to take a look at either ETrade or TradeKing to see if they fit the bill. Mutual fund companies (like Vanguard and Schwab) that offer index and no load funds are also great places to invest.

3. Look for places that will offer you great service.
I’m noticing more and more that financial institutions are trying to be more competitive by taking the extra steps to improve customer service. During this recession, these financial companies are all after our business, so don’t be afraid to ask for dedicated help from your bank or broker when the need arises. I can’t tell you how many times I’ve received courtesy calls from various institutions, checking in to make sure I’m satisfied with their services.

4. Rebalance your portfolio.
A stock market slump is actually an ideal time to tweak your portfolio in case it’s gone off kilter. You may want to restore your portfolio’s asset class proportions to their original state now that you could be subject to less capital gains taxes if you do decide to sell larger positions. It’s also a good time to buy new positions given the better market prices across the board.

5. Drop your losers for tax benefits.
I also think that if you’re holding some losers in your portfolio, it’s a great time to bid them goodbye. Decluttering your portfolio when prices are relatively lower allows you to write off the losses; if you’re interested in buying back your original positions, just make sure you don’t trigger the “wash sale rule”.

Sure, the recession has ravaged our portfolios and put a cramp on our interest earnings. But I also believe that our current economic situation is something which we can leverage for financial gains. If we do the right money moves, the opportunities we’re afforded by this kind of downtrend may actually help solidify our investment plans further (since they’re tested by a poor market) and set us up for a stronger comeback when the economy eventually bounces back.

What Happens to Joint Accounts or Authorized Users When Main Card Holder Files For Bankruptcy?

Mr Credit Card — Fri, 26 Jun 2009 14:39:34 +0000

Here is a question from a reader:

Hi,
I have a credit card which I’ve had for years. When my daughter, at age 17, went to college, I got her a card for emergencies. She didn’t sign for it and we didn’t ask for joint account. She used it a few times but since had paid it off. I went through a financial struggle and used the card myself to the limit and now am in BK13. They shifted the debt to her, changed the name on the account and sent it to collections. It now shows on her credit report and we have never given them her SSN. I don’t understand? Can this be?

Mr Donald Harless Jr

Answer – Donald, though you think it is a joint account, it may well be that your daughter is just an authorized user. But I’ll try to explain the consequences of your situation.

If she is just an authorized user

Yes – your delinquent account can be reported in your daughter’s credit report – Even if your daughter is an authorized user, the credit card company can report on a delinquent account on your credit report and her credit scores will be affected. It works positively when she was trying to build her credit but will work negatively against here. Yes, your daughter did not sign anything, there is no federal law prohibiting the credit bureaus from not reporting such measures

How to find out if she is just an authorized user or a joint account holder with you?

I suggest you ask your daughter to get a copy of her three credit reports (from Experian, Equifax and TransUnion) and thoroughly comb through them. If she is just an authorized user, it will show up as an “A”. If it is a joint account, then it will show up as “J”.

If she is an authorized user, then this are your action steps

Do not pay anything to the collection agencies – Even though your bankruptcy filing, or late payment or whatever shows up in your daughter’s credit report, paying off those debt WILL NOT improve her credit score because it is already classified as delinquent. Even if she helps you pay it off, the account will remain on her credit report for seven years. Secondly, she is absolutely under no obligation to pay it off if she is an authorized user.

Challenge the account under question – Write to the credit bureaus and challenge the account. If the credit bureaus cannot validate this within 30 days, then they would have to remove the account.

Using Validation against collection agencies – If your daughter ever answer a call from the collection agencies, simply ask for a name and an address and then HANG UP. Write to them requesting a validation of the debt. Many times, they are unable to validate it and they will magically disappear! Send all correspondence using “certified mail” and keep all records.

(having said that, if you are in the middle of filing for chapter 13, you will be on “automatic stay” which means your creditors are not allowed to contact you)

But what if she is indeed a joint account holder

Since you are filing under chapter 13, by definition, you and your attorney will have to present a payment plan to your creditors. You will have to present a plan to the judge and you will also have what is called a 341 meeting with your creditors. This is when your attorneys should all these sorted out.

I do not know how long you are in the process of your chapter 13 filing, but depending on your state laws, it may or may not be too late to remove your daughter as a joint account holder. And since the account has been sold to a collection agency, it may probably be too late.

But if your daughter is indeed a joint account holder, then your bankruptcy attorney should know about this and have all this sorted because the debt will not be wiped out and you will have to negotiate your payment plan. In this case, you best bet is to consult your BK attorney.

To sum up – There is a higher chance of removing the credit item from your daughter’s credit report if she is an authorized user. But if she is a joint account holder, that is a different story. Her credit report will take a big hit. Best to consult your BK attorney.

Identity Theft Story – How MyMoneyShrugged Lost His ID

Mr Credit Card — Wed, 17 Jun 2009 11:30:42 +0000

This is a true story about an Identity Theft that occurred to “Atlas” (pen name) from My Money Shrugged. Though identity theft is always reported in the news, it is not like we encounter people everyday who have their identity stolen. I’ve asked Atlas to tell his story. He even sent photos of his files! Please check out his blog and subscribe to his rss feed. Here is his story in his own words

How it happened?

January 12, 2004, the day my identity was stolen, I went to my mailbox and received my mail. On the way back to my apartment I saw a letter from Exxon Mobil and was surprised when it had “immediate attention” required on it. At that point in my life I was used to receiving credit card offers and such, but this envelope did not look like the normal ones. I opened up the letter to find out that an account had recently been opened up under my name, but the address and/or first-last name did not match with the one with the consumer credit bureau report. They wrote the letter to confirm that I had opened an account. Thank goodness they wrote me because I was able to call them back immediately, only to find out that it was real and that it had not been used yet.

Damage Control

They were very helpful and they told me only that I needed to contact the credit bureaus and the FTC. I needed to let them know that there was a possibly of identity theft. Once I contacted all three of the credit bureaus and told them my situation they told me I needed to file a police report and that they would all send me my reports ASAP. I received all credit report to find that they had also opened and American Express card under my previous mailing address. I had to write letters to both Exxon and AMEX, write letters to all three of the credit bureaus, and I had to write to FTC and request an investigation of identity theft.

I also needed to add a fraud alert in writing and over the phone on to all of my credit, reports, mailing, and credit cards. I had to write all of my financial institutions and notify them of my situation while documenting everything, including logs of all phone conversations with the names of people whom with I spoke. Along with each piece of documentation, I had to make copies of my Social Security card, Pay Stud with SSN, W2 Forms, Drivers License, Rental/Lease Agreement and Utility Bill. Once I got all documents prepared and made sure everything was really nice and tight, I had to spend the extra money to send each one to each institution by certified mail (at the time, it cost me around $50.00). I received letters from all of the investigations for my claim of fraud and they all determined that I was not responsible for any fraudulent transactions. Also, everything had been removed from my credit report and score, even though it took somewhere between 30-90 days.

Call from Collection Agency! Yikes

As a side note…knowing that they had opened at least one account at my past address I was pretty sure they were going to get caught, but I never heard back from the LAPD about my case or their findings. Fast forward to July 19, 2006. I received a statement from Capital Management Services, Inc. notifying me to resolve a delinquent debt of $1743.58. I immediately contacted the collection agency and asked what is going on with the delinquent debt. I have never in my life been called a liar, until I spoke with the service rep. She told me that I was lying and that I needed to pay them right that second. We got into the most heated debate and I was absolutely floored with what she saying. We ended the conversation because we were yelling at each other and, eventually, she hung up on me. I was shaking when I got off the phone with her. I had never experienced anyone so hateful, but was also scared about what was going to happen to my credit score.

Dealing with Collection Agency

I called my father and together we came up with a game plan on how to deal with the settlement company. After our conversation, I called Chase Bank, USA, and spoke with their fraud department. They informed me that someone opened a Home Depot account under the alias of my wife, and that they had my social security #.

I got a buddy of mine who went to law school to write a letter disputing the debt. In the letter we wrote the collection agency telling them that the address they had for the card was incorrect, along with my mothers maiden name they had on file. I also requested that they hold all collection activities that would show up on my credit report and damage my credit score. I had to go through the whole process I previously outlined above, plus add the collection agency to the list. After filing another police report, I had to add an “extended” fraud alert to my credit reports via certified mail. Once again I never heard back from the LAPD, but Chase determined that I wasn’t responsible for the transactions and cleared the delinquent debt and marks on my credit.

Additional Measures

I decided that I had had enough. I opened a Lifelock account, which protects my identity, but costs me $110.00 per year. I also take the time every year to check my credit report to make sure nothing suspicious shows up. Every time I open a new line of credit I have to go through a whole identity verification process. I either have to go through a series of questions to prove my identity before I can open an account. When I was trying to get cable, I signed up online and the day when technician was supposed set up, the system froze me out. I called the cable company and their online system never signed me up. I had to show valid I.D and proof of residency in person down at the cable company’s office. Little things like this constantly haunt me and it is just a part of life now.

The one and only good thing that came out of this situation is that I don’t receive junk mail anymore. I didn’t need identity theft to happen to stop receiving it. The kicker in this whole story is that it was not only my identity stolen. They stole my life away from me. It cost a lot of money when it happened and it is still costing me my hard earned money everyday. Money is money and it sucks, but the thief easily took days, if not weeks, off of my life by having to fill out paper work, file police reports, mail documents, and had to talk with the rudest person I have ever spoken to. That is time I will never get back and it is unacceptable that people can get away with this. They not only steal your identity, but they steal your livelihood, your thought process, and your money. It is you that has to suffer, it is you that has to make all the efforts, it is you that has to worry, it is you that has to spend the extra money, it is you that has to go through a longer process for opening up another line of credit, it is you that has to explain yourself, and it is you that will never get your life back for dealing with this. Identity thieves have no soul, they are the scum of the earth, and they have no moral code by which they live.

I would never wish this on my worst enemy, but I can honestly say that all the credit card companies, the FTC, and the credit bureaus were absolutely wonderful while dealing with the situation. They were on my side, they took it very seriously, and that they told me they would do everything in their power to work with me to make sure my credit was cleared. I hope that my story can be an inspiration to help you take all the steps you need to make sure it never happens to you. If you have any questions please contact me at mymoneyshrugged@gmail.com

Note from Mr Credit Card – If you have similar experiences, please share them with us by commenting below. If you would like me to publish your story, please submit it here.

Finally, I really want to thank Atlas for taking the time to share his story with us. Please visit his blog and feel free to ask questions here as well. I’m sure he’ll be checking this post.

Advanta Pulls the Plug on 1 Million Customers – Lessons to be learned

Mr Credit Card — Tue, 16 Jun 2009 11:15:36 +0000

Sometime during the middle of May 2009, Advanta Bank (who issues only business credit cards) informed their customers (or rather cardholders) that they will have have to stop using their card. Someone had to stop charging by the end of May, some were given until 10th June 2009.

This news simply shocked many Advanta credit card holders and it shocked me too. The reason for Advanta doing this is probably due to their losses on their credit card portfolio (rumored to be as high as 20%). But what really shocked me was that they decided just to simply shut down their customers. Couldn’t they have sold off their credit card portfolio to someone else? That was probably the ethical thing to do. Instead, many business owners are scrambling to replace their advanta credit cards and get another one with similar lines of credit.

But I thought that there are some lessons to be learned from this episode.

Do not just rely on one credit line for your business or working capital – Many business owners rely just on their business credit cards for their line of credit. This episode has shown that this can be a very risky strategy. Instead, one should also get a line of credit from your bank. Yes, it may be more expensive (ie higher rates). But having a diversified source of credit lines is very important.

Have enough emergency cash – Yes, this sounds like personal finance advice. But it applies to a business as well. In fact, in the bond market, cash flow and cash on hand and two extremely important factors in evaluating the credit worthiness of a bond issuer. The more emergency cash on hand you have, the more stable you are and things like that will not derail your business.

Have a few business credit cards – Well, you shouldn’t just have business credit cards as your sole source of credit. You should also not just have one card. Get an Amex, a Discover Card and/or a Visa or MasterCard. That way, when one card pulls (like Advanta did), you have other cards as backup.

Some suppliers do not accept Amex. Some do not accept Discover (though most accept Visa or MasterCard). So make sure you have a few of them.

Business Credit Cards Are No Different from Personal Credit Cards – Yes, you’ve heard me. There is no difference between a “small business credit card” issued by the top credit card issuers and their personal credit cards. The reason is because both require the personal guarantee of the applicant (in this case the business owner). So if you fail to make payments on your business credit card, then your personal credit suffers!

Some business credit cards may not report to the three personal credit bureaus, but will do so if you are late!

The only cards which do not require personal guarantee are corporate cards. Corporate cards are only issued to businesses who are of a certain size, like 8 or 9 figure sales and lots of employees. Hence, unless you are the owner of a decent size business, corporate cards are out of the question.

Use Your Rewards Quickly – In todays’ environment, you never know what credit card companies can do. If they simply freeze your card for any reason, you could loose all of your rewards. So as a matter of policy, watch your rewards and use them while you can. Use them as soon as you can redeem them for rewards that you want.

Establish a business credit history – This topic can consume a whole blog itself. But if you have a business, take the necessary steps to establish a business credit history. At the most basic level, this involves establishing your business checking account, registering with Dun & Bradstreet, taking out a couple of small loans from folks who report to the business credit bureaus.

A solid business credit history will make it easier to get loans and working capital lines of credit.

It may be better to get a personal card – The latest credit card bill of rights does not (IMO) apply to business credit cards. Hence most of the protection offered in the bill may not apply to business credit cards. Lately, credit card issuers have been much more stringent about business credit cards because it appears that folks are paying off their personal cards but missing payments on their business cards when things are tight. All these plus the fact that your personal credit is on the line suggests to me that you are better off getting a personal credit card and using it for your business.

I would appreciate any thoughts from all of you.

Wrong Card Application By Bank of America – What To Do?

Mr Credit Card — Wed, 06 May 2009 11:15:41 +0000

Here’s a crappy story about BOA from our reader:

My situation is I’m trying to establish my credit for employment purposes, my score is ~550, I have no accounts in good standing b/c I actively tried to avoid having credit cards in the past.

I took advice from you and others & decided to try self-credit repair by borrowing against my own money using small secured loans and secured credit. I went to Bank of America and applied for a $500 secured credit card. A week later I got a denial letter that said I applied for a “Platinum Plus Mastercard”. This is obviously not what I asked for and I knew before I went I don’t qualify for that. I was totally honest with the bank employee, the vice president of that small branch, in telling her I have 2 old chargeoffs for utility bills amounting to $300 of past debts that will be on my report, can’t qualify for unsecured cards, etc– and that I have $500 of savings I want to borrow against using a secured card with intention to establish a good standing account on my report.

I feel like I was misled by BoA policy & procedure by not considering me for the correct product which I asked for and they advertise. This feels like a game to justify why they can’t give me a secured account with no risk. Now my credit report has a new pull for a credit product I didn’t even ask for. I guess I’ll send them a letter, but what else can I do?

Thank you for the site

J Smithwick

Thank Mr Smithwick for your email. We’re sorry to hear about what happened and that is really another idiotic thing BOA did. Bank of America is really a strange creature. I know for a fact that for example, their secured credit cards are not issued to those out of bankruptcy (even though it is “secured” by a deposit!). But I wouldn’t hold everything against BOA. Chances are that the branch manager did not know any better and he probably has very few folks come to him wanting a secured credit card.

If I were you, I would worry about the pull on the credit report. Yes, it’ll ding a few points in the short run. But what you are concerned is building your credit history. Getting a secured card is still the best way to go.

You can take your $500 and try getting a secured card with say a Public Savings Bank Secured Card. They are one of the rare secured credit card that does not charge an annual fee, allows you to deposit up to $100,000 (though that is not so important in your case), reports to the 3 credit bureaus and has a 25 day grace period. They also claim not to check credit reports, income or employment. You might want to give this a shot.

Or you can shop around for any credit unions near your place. Just make sure they report to the three credit bureaus as you want to rebuild your credit. Also, do not carry balance. Just pay in full every month and as far as credit score is concerned, you should be able to get your scores to above 600 in about a years time or even shorter.

My Mom Used My Credit Card And Racked Up $8000 In Debt. What Should I Do?

Mr Credit Card — Mon, 04 May 2009 15:23:38 +0000

Here’s an email we got recently :

Mr. Credit Card

I am so confused on what if anything that I can do about my situation. When I first turned 18 I applied for a credit card, and got approved. I did not know about this credit card until one day my mom came crying to me that she thought I called to tell them it was stolen… but really it was her that was using it. After giving me this long sob story I – stupidly – agreed to make her able to use the card. She promised to make the payments, turns out you can’t even trust your mother! Now I am in debt $8,000! I have no idea what if anything I can do. Please if you have any advice!!

Crystal Smith

Answer: Crystal, looks like Mom has broken your trust. I have to ask you a couple of questions first.

I would assume that you approved Mom to be an authorized user of your credit card and she is not a joint account holder. If this is indeed the case, then all you have to do is to remove your Mom as an authorized user and she will not be able to use the card in future. I would suggest having a word with her first and confront her. You will have to tell her that what she did was unacceptable and that you would have to remove her as an authorized user. Here is an action plan.

1. Set a Budget and a Payment Plan

I would assume that you are not able to pay off the $8,000 at once. You said you were 18 years old when you got the card, but I do not know how old are you now or whether you are in college now or are you working and earning some income. What you should now do is to set up a budget, look at your income and expenses and figure out a payment plan that will eliminate this $8,000 in credit card debt. You may have to cut back on some spending. But what you want to avoid is having to just pay the minimum.

You can use this calculator from CNN to help you figure out a realistic time frame to pay off the debt

to figure out how long it takes to repay your credit card debt.

You may have to make some sacrifices and work part-time if you are at school. Or work more if you are already working part-time.

2. Explore Balance Transfer Opportunities – You did not mention what rate you are paying on your card. I also do not know your credit scores. But definitely explore 0% balance transfer credit card deals. They will help you save on interest payments and your cash flow in your quest to eliminate this credit card debt.

3. Confront Your Mom

Once you figure out a plan, I would then confront your mom and at the end, ask her if she would bear some burden in your payment plan. Ask, but be realistic and do not expect anything.

I would be firm with your Mom and tell her how disappointed you are, but also be nice (in the sense that this should not turn into a shouting match). Bear in mind that what she did was wrong. She should never have been using your credit card (she should have got her own). She has broken her promise not to pay. You also have not told us about her situation : what does she do? how much does she make? Can she afford to pay?

4. Try to Get Refunds

There are other things you can do. For example, find out what has your mom been buying. Has she made any impulse purchases within the last month (like BowFlex on QVC). If you has bought some high ticket items within the last 30 days, you may be able to return and get a refund (especially for late night infomercial products).

5. Remove her as an authorized user

I’ll leave it to you whether to do this before you speak to her or after, but either way, this has to be done (IMO).

To summarize, here are your actions steps :

Set a budget

Come up with a plan to pay off your credit card debt. You use use some online calculators like this one from CNN to help you figure out a realistic time frame to pay off the debt

Explore Balance Transfer Opportunities

Sit down with your Mom – tell her how disappointed you are and that you are now stuck with this $8,000 in credit card debt

Show her your plan and ask if you would help – I would not count on it though

Tell her that you would have to remove her as an authorized user and ask her to get her own credit card (BTW – you can recommend my site!)

Sometimes life sucks and things happen. Stay focused. You need a plan to reduce this debt, stop the problem and move on. And also learn your lesson. If you are still in college, you may have to work part-time and if you are already, you may have to put in more hours. Remember, at the end of the day, it is your credit. Your credit score will affect whether you can rent, get an auto loan when you decided to buy a car and even affect your employment prospects. Pay off the debt ASAP and move on.

Oh – one more thing. You did not mention this in your mail (and I do not know your entire situation), but would speaking to your father about this help?

Anyway, hope this helps. Good Luck.

Capital One Raises Interest Rates After Balance Paid Off! What happened to Customer Loyalty?

Mr Credit Card — Wed, 29 Apr 2009 12:10:28 +0000

In my previous post, I mentioned how Chase actually upgraded my credit card to a Visa Signature status. However, for many folks, getting their credit lines cut and interest rates raised even though they have always paid on time or even paid in full, seems to be happening more frequently these days.

I just received this story from Matt of Financial Methods who had his interest rates from his Capital One card jacked up after he paid off his balance! He is pretty philosophical about it and just wonders what has happened to customer service. By the way, you can subscribe to his blog here.

Here is his story:

As I wrote about in the beginning of march, Capital One jacked up my interest rate, just after I finished paying off my balance. It started relatively high (compared to where I would like it) at 13.99%APR and jumped to 17.99%. The notice that I received in the mail indicated that the change was to start on Feb. 16th, the strange part about that was that I did not receive the notice until March 1st. Needless to say, I was frustrated. I was also glad that I had paid them off and that I would not be giving them the extra profits that they were forcing upon other customers.

After researching, and from word of mouth (I do work at a bank, after all) I discovered that this was not a random act of unkindness from Capital One and this has actually happened with many cardholders. Forget that I have been a loyal customer for years and have never had a late or missed payment. Also forget that I had carried a balance for years, usually paying the minimum and in the process, giving them loads of money. Now, keep in mind that I do not intend to carry a balance on this card again, but the rate does still matter to me. After all, sometimes life happens. It was time to make the call.

Nobody likes to go through the monotony of calling customer service. The annoying menus and long hold times just add to the frustration of why the call is being made in the first place. Regardless, I try to make these calls when I am in a relatively good mood. The operators are almost always more receptive to a calm, cool voice on the other end of the line. I often try to put myself in their shoes and imagine their level of annoyance or anger toward who is on the other end of the line. I think like this, because I know that if it were me in their shoes, I would be getting mad, and the madder that I get, the less willing I am to help.

Surprisingly, I was only on hold for about two minutes before I got to a real person. She sounded young (20’s maybe) but experienced. Judging by the language she used, she has been doing the job for a good amount of time and no doubt gets calls like this all the time. Instead of typing out the entire conversation that only lasted a few minutes, here are the highlights:

Me: I’m calling to find out why my interest rate was recently raised and to ask that the decision be reviewed and my previous rate be reapplied.

Capital One: Due to recent delinquencies on a larger percentage of our credit lines, many customers’ rates were raised.

Me: I understand that the economy has been poor, but is it really fair to penalize customers like myself who have never had a late or missed payment?

Capital One: Unfortunately, we will not be able to reinstate your previous interest rate. We have reviewed your account and you are not eligible for a reduced rate at this time.

Me: You do realize that I do not even currently carry a balance.

Capital One: I’m sorry sir, at this time, there is nothing further we can do regarding this matter.

There you have it, take a good customer with good credit and try to get a little bit more out of him and what do you get? One less customer. I will not close my card, but I do not intend to use the card for anything more than a few dollars. I definitely will not carry a balance on the card ever again. I just do not understand the mentality. Jack up the rate on delinquent or frequently late customers, do not go after the good ones.

So I ask, what ever happened to putting resources into customer retention? Too many businesses will pump billions into attaining new customers, but spend far less to retain the ones that have put them where they are. I am not trying to stage an uprising against Capital One or any other business. I am merely voicing my frustration with what I view as an unfair situation. It also makes me wonder how many thousands of other loyal Capital One customers have been through the same grief.

Mr Credit Card: If you have had similar experiences, please share them with our readers by commenting below. Tell us what happened and share your thoughts if anything triggered it. What did you do? Have you applied for a new card?