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Ask Money

A bad credit card experience

Chris Farrell Mar 13, 2009

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!

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