At the risk of sounding like a letter from a far different publication, I’ll just say it: I never thought it would happen to me.
After all, I pay my bills on time. I don’t abuse credit. I play by the rules. And while I have heard stories of credit card issuers slashing customer limits and changing terms willy-nilly, I figured that my excellent credit score and I would be just fine. Wrong.
First, one of our credit card companies—a national bank that just happens to have taken billions in taxpayer bailout money—informed us that they would be raising the “fixed” interest rate on our balance. This is a card we use sparingly and have always paid over the minimum balance required, but it still had a substantial balance. We could avoid this rate hike by canceling the card, meaning a hit on our credit score.
We tried the standard technique of calling the company and asking them to revisit the rate change. After all, we are good customers and have been for almost five years. To say that they were not interested in retaining us would be an understatement. They couldn’t close the account fast enough. So we paid off the balance, and the closure left us two credit cards, both of which had completely open credit lines. We figured that would be enough to maintain our credit score and protect us in case of an emergency.
The emergency happened just a few weeks later, when my husband was involved in the car crash I wrote about last month. We had to come up with a substantial (for us) sum of money to add to the insurance settlement so that we could fix the car. Figuring that this was just the sort of dire circumstance that credit cards were meant to handle, we wrote an “access check”—one of the many cash advance checks that we’ve received from this national issuer (and bailout recipient) on a regular basis since I got the card in 1995—that promised 0 percent interest until March 2010.
Two weeks later, we received notification from the company that they had refused payment of the check and slapped us with a $39 fee for the attempt. Gentle readers, we had a $24,700 open line of credit on this card, more than 10 times what we needed to cover our check to the trusted body shop guy—or so we thought.
Turns out they had canceled our card for inactivity the day after we wrote the check. We received no notification that the card was in danger of cancellation, nor did we receive anything informing us that the account had been closed. But I’ll tell you what we did receive from them, the day before we got the refused check letter and dated three days after the account had supposedly been closed: more access checks, exhorting us to spend, spend, spend our $24,700 in credit!
We talked to managers, wrote to VPs, sent a registered letter to the CEO—and received not a single response from any of them other than a canned, repeated “We understand your frustration.” Not likely. After all, it wasn’t they who had inadvertently written a bum check to a local business in a town of 7,500 people.
Lately there have been calls from the White House and Congress to regulate the credit card industry, and my experiences have left me with the conviction that change can’t happen fast enough. If being a good customer and a responsible consumer can’t protect people, then it’s time for someone else to help us out.
In the meantime, I will keep my credit cards closer—as in issued by a local bank instead of a national corporation. In the decade or more I’ve held a credit union credit card, I have never been hit with a rate hike or encountered any problem that couldn’t be solved by a quick call to the loan department. That’s the kind of service everyone should be able to expect.
NB: A version of this column appeared in today's issue of Business to Business.