Taking Advantage of Sandy: Bank of America Uses Storm to slash credit lines
Helping those affected by superstorm Sandy has become the new marketing strategy for the financial sector. From E-bay to Paypal to the mega banks whose ruthless and reckless behavior drives the Occupy Wall Street movement, everyone is claiming to help residents in New York, New Jersey, and Pennsylvania deal with the financial burden created by the storm's aftermath.
Unfortunately with some companies this is much more hype than substance, a way of trying to smooth over the feathers of so many of us hurting due to the Great Recession.
On Monday November 5th, I phoned Bank of America just to find out if they received my payment. Bank of America recently acquired PNC Bank, the regional bank centered in New Jersey and across the greater Philadelphia-Newark- New York region that was my personal bank while living in Essex County, New Jersey.
For about a decade, I maintained a terrific relationship with PNC, building a strong line of credit over the years despite five years of under employment and nearly four years (since May 2009) of unemployment. In all that time, I never once missed a payment when I had a balance, creating for myself an eviable FICO score that has carried me through this recession, helping my applications for work and especially helping me secure housing.
I've worked hard for my FICO score!
A key component to my against-the-odds financial success has been my intelligent use of interest rates -- using balance transfers from time to time to keep my APR as low as possible across my debt load. My PNC credit card fell from an initial higher APR to just 7.9% as a result of this payment history and intelligent financial management -- while making just $7.00 per hour working in market research and with an income that was insufficient even for my rent payments despite working over 30 hours per week.
Being a good, stable customer used to matter. That is, until Bank of America took over!
On Monday November 5th, all I wanted when I called them was the make sure I had the new contact information correct and that I had successfully made my payment to the new account number and new address. I was not interested in any sort of promotion or change to my account.
Everything fell apart after talking to a live person to confirm the payment. The representative noted my address as part of the Sandy zone and began his sales pitch. He flattered me regarding my long account history and excellent payment record -- then asked me if I have any other credit accounts.
Buyer be ware: never answer this question in the affirmative to a credit card company!
Once the representative knew I had other accounts, the serious pitch began. He claimed there wasn't a balance transfer offer on my account but he could "create one for me" with a 4% transfer fee, zero percent promotional APR for eleven months, and thereafter the transferred balance would go to my regular 7.9% APR. With a Chase APR at about double that rate, he was pursuasive. After all, the first step in getting credit paid off is to reduce how much interest you owe so that more of your payments go to the debt itself. Having used that method for most of my adult life, his pitch was logical to me -- and pursuasive. I agreed to transfer $2000 of my $5000 balance to the Bank of America account.
Everything probably would have been okay if not for the next stage of the pitch after he talked me into making that balance transfer.
After getting me to agree to part one, he told me that since I lived in the Sandy zone, I could get a credit line increase -- and recommended I get my line increased to cover my entire Chase balance.
Not expecting anything punitive (and not being warned anything punitive could happen), he eventually persuaded me into getting transferred to the department that handles these credit lines. In the past, these inquiries were never negative -- a decline meant no change to the account.
With over twenty years experience with credit cards, I had NO REASON to believe that I had anything to lose by going along with the pitch and asking for the increase. What harm could asking be?
With Bank of America, asking is the worst thing you can do, as I found out.
After the new agent took down my information, she put me on hold for at least ten minutes. When finally she returned she reported the following
1) my request for increase in credit line was declined
2) my balance transfer started five minutes before was now cancelled
3) my credit line of $4500 was cancelled effective immediately.
I could not believe my ears. The first part wasn't a big deal; I did not feel I needed the credit line increase coming into this. But the rest was and is shocking to me. In a matter of seconds my debt to credit line ratio surged from 85% (a healthy number) to 99%. This means a substantial drop in my FICO score and vulnerability to having all of my other credit cards cancelled right as the holiday shopping season begins.
This also means increasing my minimum payment per month across my cards -- without ever missing a payment in the past and without any sort of outside assistance beyond the public housing assistance I'm receiving (I am not even getting food stamps just because I have a little savings in the bank -- to pay rent with!).
In seconds I went from a golden credit to a poor credit -- without making a mistake to merit it! Since when does a perfect payment history put you in the same catagory as bankruptcy?
I appealled to the service rep, reminding her how I came to speak to her and reminding her of my long credit history with this account in particular. I also told her the obvious: rescinding my credit means I cannot give them more business; my entire point in speaking to her was offer Bank of America MORE MONEY, MORE BUSINESS!
But she did not care. She just repeated was a horrible credit risk I was for losing my job and how there was "nothing" she could do until I regained my $40,000 a year salary.
Sandy, it would seem, is just an excuse for Bank of America to learn about a customer's hardships -- so they can penalize you for it.
Frustrated, today I filed a complaint with the federal bureau of consumer affairs, the agency created by President Obama.
I do not expect help, but I think consumer affairs -- and you -- should know about this.
We need to do something about how banks treat us!
Laurel A. Rockefeller, author
The Great Succession Crisis
E-Book ISBN: 9781476243344
Print book ISBN: 978-1479144808