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I'm a Minnesota Girl, living in the south. I tell my friends I try not to talk and think like a Yankee, but sometimes I slip up!

Sunday, March 22, 2009

Loan Sharks and Outsourcing

Y'know, with all the outrage seething over bonus and incentive payments, its hard to get a grip on what is happening to middle Americans.

Forget the bonuses...the companies that have received TARP or other Federal funds to keep going have determined how to make that profit in January-February that will insure their stock prices rise. They're going to exact their profits from anyone who still has a job, anyone who hasn't claimed bankruptcy

I started to pay off all my credit cards last October. Oh, I'd messed around with it before, but never really seriously. I'm a credit kind of gal, much to my detriment. Then, I got hit with a serious illness in November and didn't recover until January. I was luckier than most, because I had a healthcare Flexible Spending Account at work. My company is not so savvy with these, most companies have a debit card attached to the FSA, so the employee does not have to front the money. With co-payments, testing, a a whole plethora of prescriptions, I got pretty well into my credit cards and had to wait nearly 50 days to be reimbursed. At the same time, my son lost his job, and suddenly my salary that is comfortable for one had to be stretched for 2.

Nonetheless, I made big payments on all my cards. Hundreds of dollars. I was pretty pleased that a lot of my balance was at special offer rates... 3.99% and 4.99%, and my regular rate on my cards was 13.99-16.99%.

Here's what's happened to me in the last month. I paid a thousand down on a card that had a $1,000 of free credit. I was going to close the other accounts while paying them down and keep
this line of $2,000 and growing open for emergencies. My card company immediately lowered my line by $1,800 and raised the interest to 27%.

When I called, I learned that it was because I made a telephone payment on another card in December (when money was tight, I had to wait for payday) at 1:00 a.m. on the 20th. The payment was due on the 19th. That's right, I was one hour late.

At the same time, I paid $1,500 on another card when a friend I had loaned money to finally found another job and paid me back. That was the whole balance, and I closed the account. I found out about my 1/2 hour payment sin, with some difficulty, from the rep who answered my questions. I'm not sure if he was in Bangalore or Mumbai. He did tell me it was obvious that I'd taken a balance transfer to pay off the $1,500, thus increasing my credit "sins".

I opened envelopes for my other two cards, and sure enough, the special offer and the regular rates had disappeared. I am now at 27% on all my cards. This happened when the Fed Funds rate for the banks I'm with slipped to o.oo%-0.025%. Thus, the banks are taking the entire sum as profit. They need it. They lent $400,000 to some guy who didn't have a job so that he could buy a 4 bedroom house that he planned to flip. The house is now worth $250,000. So they should make up the loss by exacting their pound of flesh from me.

There is some legislation that passed that limits the right of banks to do this loan sharking kinda thing (that's right, Bank of America IS really Joe Pesci in Goodfellas)... it takes effect in 2010. In the meantime, they're all going to make as much money as they can. There is a credit card bill of rights hanging out in Congress. It didn't pass last year, when Bush threatened to veto it. No doubt it will take a lot of time this year while we grill the Treasury and that poor guy who is the CEO of AIG on WHEN they notified each other of the bonuses. Meanwhile, at 27%, it'll probably take me 6 years to pay off these balances. So I'll find another strategy and then cut up all the cards.

Here's a great article that's similar from BlueDog of the Daily Kos:

BoA still outsourcing jobs

by Bluedoc
Sun Mar 22, 2009 at 09:11:24 AM PDT

One of my friends has been a mid-level manager at BoA for several years. She was let go last week with severance pay.

Half of her customer service department was outsourced to India causing further unemployment here at home. This is not the first batch of job losses and outsourcing from BoA.
Those CEOs are going to get their money one way or the other...or maybe any way they can.

Bluedoc's diary :: ::
What better way to "handle" customer service than have someone from a different country deal with your "complaints" if you have one of the credit cards or loans with high interest rates, high fees, and "fine-print rules" that may cause your account to become unmanageable.

In another conversation yesterday with a small business owner who has always managed her business and personal income frugally, she related the following story to me:

After many years she finally agreed to open a credit card for business use to establish credit because she had recently acquired business property and was advised that to establish a credit history she needed to start using cards.

She called in to ask a question about her new card. Within a few days, she received a second card from BoA with a different account number. She decided to use the 1st card for larger business purchases and the 2nd card for smaller business purchases.

She paid off the 2nd card in full each month, but allowed the card used for larger items to carry a balance until she received payments from her clients. She always made at least the minimum payment but usually sent in the entire amount when her clients paid for their orders.

Last week she received her statement and noticed that the interest rate on the first card had been raised to a much higher rate. She called to inquire since she had never been late on a payment, had always sent in the minimum payment (usually more), and never let the card carry a balance over two or three months. She was informed that she no longer qualified for the lower rate. The representative she talked to was very rude and made many unfounded statements regarding her credit.

He asked her why she had never had a credit card prior to several years ago even though she had been eligible for credit since 1984. She explained that she believed in paying as you go and had never wanted to use credit cards because she believes in living within her means. He told her that her credit record must mean that she had filed bankruptcy at some point because there was no other logical explanation for her credit history. She was floored. She has never filed bankruptcy.
He also stated that she must have paid off her 2nd account by transferring a balance since she had paid off a sum of about $4000 at one time. She told him that since she still had a balance of a few dollars on that account there was no way it could possibly be a balance-transfer and leave a small amount on the card. She had not done a balance-transfer but this young fellow was very argumentative.

She asked him if the interest rate on the 2nd card was still at the original low rate or if it had also been increased. He put her on hold to look, then came back to tell her he had closed that account because she was eligible for only one account. She told him that she had not opened this second account...the bank had opened it and sent her the 2nd unsolicited card.

The representative told her that there was no way to lower the interest rate on the 1st card back to the original rate. She had missed no payments and always paid on time. Nothing had changed on her end, yet the interest rate was raised to a much higher level and her FICA score is affected by the bank closing the second account that she did not open by her own accord.

She kept asking to speak to his supervisor but he refused to let her talk to anyone else.
She said that it has been a nightmare dealing with the bank regarding these credit cards. Without the cards, her ability to pay her business loans depends entirely on her customers being able to pay her on time.

The economic crunch is much more dependent on the banks and the credit card industry than anyone is yet acknowledging. If the banks continue to charge loan shark interest rates and treat people in a way reminiscent of the mob loan-shark days our economy is going to continue to grind to a halt.

The CEOs riding this mechanical horse don't realize that it is time for an "oil change". They are not maintaining the economic engine with their self-serving practices.

So, am I angry about AIG? You bet. I have, however, been around corporate life for a long while, and really, nothing surprises me. Am I OUTRAGED about my own financial situation? Yes, that makes me outraged. There's a difference. And, its personal.


Donna said...

More banking regulations need to change. Banks have been given a license to pillage and rape. I NEVER use the word rape because I feel it desensitizes us to the true meaning, but I am using it correctly because what is being done is truly victimizing.

NSF fees - Example - I have 100.00 in my account. Three checks come in - $25.00, 50.00, 100.00. Banks used to post 25.00 first (Balance 75.00) 50.00 (Balance 25.00) 100.00 (Balance -75.00) One NSF fee.

Now banks post highest to lowest. 100.00 (Balance 0.00) 50.00 (Balance -50.00) 25.00 (Balance -75.00) Two NSF fees.

Here's something else they can do - I put money in Marc's account after 2:00 (at 5:30). Cash. They added it to his available balance. He went that night (5 hours later) and used his card to take his brother to dinner for his birthday. Had multiple swipes. The bar, the meal, etc.) They posted the swipes (soft-posts, mind you) but they didn't account for the deposit because it was after 2:00, and charged him SIX 35.00 fees for UNCOLLECTED funds. Now, he called and they immediately refunded all the fees.

They have it both ways. They put the deposit online for you to use after 2:00, but they don't post it until the following day. HOWEVER, if you use your card after 2:00 and up until midnight, they will post it for that day and charge you for every swipe.

If you call they reverse it, but my question is - how many people don't call? That's the part that pays off for them, because a lot of people don't call.

It has to change.

quid said...

OMG Donna - those types of actions by banks are truly despicable. I had no idea it had sunk to this level.


Pam said...

It's scary and it should be criminal!

I'm trying to pay off my credit card debt, but, doing so very carefully. How sad we have to live in fear of what an inadvertent misstep could do to the rates!!!!!!

I wish I was on the receiving end of one of those extortion...I mean retention bonuses. :)

Donna said...

Quid, back when I worked for BoA, I thought I was alerting my supervisor to a bank error. I told him a customer was charged a fee because their cash deposit was after 2:00 and they used their card at Publix at 6:00 PM, he said, oh yeah if they use their card until midnight it will post for that day. So I said, if we don't credit the deposit if it's made after 2:00, then we can't post the debits if they're made after 2:00. He just kept repeating, it's not a bank error.

I said - this bank can't have it both ways. I was in a position to reverse the fees, and I did - every freaking one of them. I didn't wait to be asked, I volunteered.

Any wonder why they fired my butt? LOL! Trust me, I was tagged - "Please dispose, ASAP." Eventually, the entire department was shut down, anyway, but what a despicable way to take advantage of people.

I have a few friends left at BoA, but in check fraud. They're never sure about their jobs and it's been that way for a while.

Debby said...

Oh my goodness. I keep hearing that you can now call credit card companies up and bargain with them. That has never worked for us. We told the company that we were cutting up the card. They didn't seem to mind. We are horrible people who pay our cards off every month. They make no money off us. Banks are victimizing clients every possible way that they can. Our bank has been bought out. Now we are being told that branches of our bank may be sold again. If they are sold, the accounts go with them. We have no control over this, and that the new bank can set a whole new contract for our home equity loan.

MarionL said...

I must have been one of the lucky ones because a few weeks before the "crash" hit last year, I called my one credit card company and told them I would switch companies if they didn't give me a better rate for a year as I was getting these type of offers in the mail weekly. (I saw this on a news program---to call your company and ask for a better rate). I finally got a manager on the line (the first flunky told me no) and, after some haggling, he agreed to give me 0% interest for 9 months and I've been socking every spare penny to that card now for about 6 months and it's waaaay down, thank God! I hate credit cards (they should call them what they are DEBT cards) and hope to have ours paid off this year.

Our country's banking system is torn almost beyond repair. Sad to see what greed and pure stupidity can do. I'm thinking of burying my cash in the back yard....Tee-Hee. I've heard SOOOO many people say that. You can just bet your booty that a lot of folks are taking their money out of those stupid, dumbass banks which give the customer NO service!!