Subscribe to this BlogAn unlucky game of cards
Happy St. Patrick's Day! Do you have a credit card? If so, you may need to borrow some of that luck of the Irish. It seems like everyday I read about another credit card horror story, and the victims are increasingly folks with good credit and payment histories. One of my favorite sites, CreditMattersBlog, detailed one of these stories last week.
CMB reader Ryan had been a Bank of America customer for a decade, during which he'd established a stellar history: no late or missed payments, ever. So he thought transferring a $12,000 credit card balance from another bank to a BoA card offering a lower rate would be a cakewalk. He thought wrong.
Though he was told the transaction had been approved, a week passed and the transfer seemed to be at a standstill. That's when Ryan learned it had been rejected. But here's what's worse: BoA also canceled Ryan's card altogether, without any notice. A phone call to BoA resulted in the news that a delinquency on Ryan's credit report caused the cancellation, which Ryan knows is impossible. What ensued is an endless amount of calls and arguments with BoA to get the matter corrected. But things only got worse: Ryan was told that BoA would not re-open the card. In fact, the credit limits on his other BoA cards were slashed by $30,000.
Ryan spent hours on the phone trying to get a better solution from BoA without any luck. In the end, BoA punished one of its consistently good customers, citing the "current economic climate" as its final reason for Ryan's treatment. But what's most troubling is that this story doesn't really surprise me. Card issuers are cracking down in every way, and undeserving people are in the line of their fire. So what are we to do? CMB puts it this way:
The bottom line is that a balance is a balance is a balance. Card issuers don't care about your reasons. They only care about whether you're going to pay them off. It's nothing but business. In hindsight, Ryan would have been much better off just staying off the phone. And that goes for most people. If you don't absolutely have to, don't get on the phone with card issuers. More and more, the end result is not positive.
Happen to my family as well. My Husband works full time. I WAS enrolled full time in college in pursuit of BS degree in finance (Although I worry it may not be worth anything in the long run), while working temporary jobs in between semesters in the accounting field.
My husband and I are only in are mid 20s, with FICO scores as of last year between 690-715. Over the last six months our oldest credit cards (8 years old) were closed. Thanks Citibank! Additionally, we had not used either of them in 4+ years. On three other cards the balance was reduced, and our interest rates were increased. We have not pay late on a credit card, or any other bill in approximately two and half years (last missed payment was due to my error by sending in $1 short of the minimum.)
Now, due to the credit tighten economy and our FICO scores dropping so far that I could not secure private loads in the tune of $6000 (approx. $2000 over three, quarter semesters) to fund the remaining tuition costs of attending school full time. I had to forgo $9500 in scholarship funds, which I can never get back. Rather than dropping out all together, I am enrolled part time because we can not afford repayment on my loans at this time.
Now, I am desperately searching for work to pay on the higher interest rate credit cards. However, I am finding it difficult to find employment. I have been turned down for jobs because of the potential in the future to have to leave work at 3:30 to make it to a 4:00 class, twice a week. A year ago, I was praised for investing in my education. Now, it seems to be a blocker to landing employment.
And the Kicker to all of this… Back in 2005, my husband and I considered buying a house we could raise our 1 year old daughter in. We had every member of our family – the generations above ours – and the real estate agency telling us to buy. We were pre-approved for $74K loan. I did a quick review of our monthly cash flows and said WHAT ARE YOU ALL NUTS! WHAT HAPPENS WHEN THE CAR BRAKES DOWN OR THE FURNACE GOES, ARE YOU GOING TO PAY FOR IT!?! We did not buy a house! Instead, I went back to school.
I hold my head up high. I seek out any and all job placement help I can find. And, our happy story to all of this, we were not one of those sub prime barrows who caused this mess in the first place. We, at 22, could understand that we could not afford this kind of purchase.
My husband and I do beat ourselves up pretty bad about the debt that we do have. But, with only one full time income, paying for college, and raising a young child, we thought we were doing okay budgeting our limited income, charging only big items like fixing the car when it broke down. Guess we were wrong. But, we have made it through tough times before while learning lessons along the way. The next few years will be interesting.
By the way, we have qualified for very government program available since our daughter was born, but pride and the level of responsibility we have to take care of ourselves, rather than tax payers, has kept us from applying. I don't understand how a family could afford a $74k mortgage and collect food stamps and public health care, etc. at the same time?
It is shameful what AIG is doing with tax payers money!
This exact thing happened with me with Bank of America today. My credit limit dropped $8000 for no reason, and when I called about it, the nice man in the credit department surprised me greatly by not making up a phantom delinquency but admitting that nothing had changed with my credit, but things had "changed at the bank" and they were tightening up. He then dropped by credit line another $3,000; effectively maxing me out on that card. He claims it was only a matter of time before it happened, but of course I painted a target on my head by calling them.