This is one of those stories. I hear about these stories quite a bit but I never get a lot of details. This one is different, though. I have all of the gory details. This is the story of a reader who tried to take advantage of a balance transfer offer that he received from Bank of America. Anything that could go wrong did.
My reader, Ryan, has been a credit-card customer with Bank of America for about ten years. During that ten-year period, Ryan has never missed a payment with B of A -- or any other creditor. What's more, he's never been late. Ryan and his wife both have full-time jobs. And they do not have a mortgage payment. What they do have, though, is a fairly substantial credit-card balance of $12,000.
The $12,000 balance is sitting on another bank's credit card, accruing interest at 0%. The problem, though, is that the promotional rate is about to expire, which is why Ryan was looking to move the balance to B of A. Ryan called B of A and haggled for a 1% rate, which would expire in March 2010. There would be a 3% transaction fee. Satisfied with the terms, Ryan decided to take the deal. "They read us the standard terms of the agreement and tell us the transaction has been approved," Ryan told me.
Fast forward to a week later. "We are responsible consumers who keep an eagle eye on all our finances," Ryan says. "We check our account online and notice that the transfer has not gone through." Uh, oh. Ryan decides to give B of A a call to find out what the holdup is. Turns out that the transfer was rejected. But that's not all. B of A also canceled Ryan's credit card. "We are taken by surprise. There was no notification of this termination. No email. No phone call. No letter. We had checked the account online that very morning and it was active," Ryan told me.
So what in the heck happened? "They tell us their credit department had 'randomly' reviewed our file and decided to 'automatically' terminate the account," says Ryan. "It was merely 'coincidence' that it came one day after the balance transfer offer had been made," Ryan says, not believing a single bit of B of A's explanation. (As a side note, this situation reminds me of the story that Liz Weston featured on her blog recently. Two of her readers -- also Bank of America credit-card customers -- tried to get their interest rates reduced. The phone calls ended badly (blog link here).)
B of A, meanwhile, says that it is willing to do a 2.9% balance transfer (good until August 2009) on Ryan's other B of A card. Ryan rejects the inferior offer. By this time, Ryan has spent about two hours on the phone going back and forth with customer-service representatives. Frustrated, Ryan asks for a supervisor. Ryan must have the patience of a saint. I would have requested a supervisor within ten minutes.
Ryan finally gets a supervisor on the phone. The supervisor explains what happened and says that its decision to terminate the offer and the card is related to a delinquency on Ryan's credit card. That's news to him. "We explain this is not possible, that we’ve never missed a payment," Ryan says. "They tell us that we are wrong, that we have defaulted, and that we need to discuss it with their credit-assessment department." Of course, the credit-assessment office is closed for the evening.
Ryan hangs up and heads to annualcreditreport.com so that he can get his free annual credit report. Just as he suspected, there are no delinquencies on his credit report. At this point, Ryan is pissed. "Bank of America lied to us," he says. Ryan jumps back on the phone and speaks to someone in B of A's fraud department. Ryan's complaint goes something like this: B of A reneged on its verbal agreement to do the original balance transfer, it failed to inform him of the canceled balance transfer, and a B of A employee lied about a delinquency that does not exist.
Ryan is told to call back in the morning when, the B of A employee says, someone can fix the problem. While I understand Ryan's frustration, let's make something clear. B of A, like other banks, reserves the right to change its mind about balance transfers. That doesn't satisfy Ryan but I wanted to get that out in the open. In the meantime, Ryan has now spent three hours on the phone. Ryan finally gives up for the evening.
I wish I could tell you that the story ended there. It doesn't.
The next morning Ryan is back at it with B of A. He lobs a call into the credit-assessment department, hoping for a swift resolution. Ryan reaches a credit analyst. The analyst conducts a mini financial review. Ryan provides all of the information that's requested. Ryan is then put on hold. After a few minutes on hold, the credit analyst returns. Not only is the card going to remain canceled, he is told, but the limits on Ryan's other cards are going to be slashed by $30,000. "I ask why they would do such a thing," Ryan says. Since becoming a B of A customer, household income has moved substantially higher, Ryan told me. So what gives? Bank of America said "the income figure I had given her was actually much less. I point out that she had asked for my individual income and that there is a massive difference between individual income and household income. Our annual household income is more than double my income. I also point out that this income is significantly higher than when we originally opened two of these credit cards, which we did right after college when neither of us had secured jobs."
In light of the explanation Ryan offered, the analyst said that she would recalculate the income figures. She put Ryan on hold again. Five minutes pass and the analyst returns. Sorry. Even with the big jump in income (double the first figure she used), it isn't going to make a difference. The card will remain closed and the limits will be slashed by $30,000. Ryan was told, after he asked, that the reduced credit limits would negatively impact his credit score. "Sorry, yes," the B of A analyst told Ryan. "We asked why -- having never missed a payment in the ten years that we have been customers of theirs and having never missed a payment with any card or debt that we have –- why Bank of America would suddenly, out of the blue, decide to damage my credit score. She declined to answer the question," Ryan says.
This Ryan is persistent. Ryan, extremely frustrated by this point, asks to be transferred to yet another supervisor. He gets transferred to a Kristy Meekins, who works in the Cleveland call center. Once again, Ryan explains the situation -- including the misunderstanding about the income figure that the analyst first used to justify her credit decision. After listening to Ryan's pitch, Meekins said that B of A's decision -- and the amount of credit it was willing to extend -- was in keeping with their new lending standards, which are based on "the current economic climate."
Meekins did offer an alternative solution, though. "Bank of America would give us the transfer at the interest rate previously agreed on (1%) but they would reduce our line of credit by $30,000 and we would have to spread the transfer across multiple cards, including the card that we use to make our purchases and pay in full each month," Ryan says. "Meaning, when we pay our bill, the amount will be credited against the low balance transfer rate and not the higher purchase APR which we never allow to accrue interest." Ryan knows a bad deal when he hears one. This one reeked. "We tell her this is not a solution," says Ryan.
After giving the supervisor a lecture on B of A's own financial woes, woes that the American taxpayer is helping to cure, Ryan throws in the towel. After spending five-and-a-half hours on the phone with B of A, no resolution was forthcoming. "If this is how Bank of America treats customers of ten years who have never been late with, or missed a payment, I cannot even begin to imagine how they are treating customers who have had difficulties across the years," an exasperated Ryan tells me. "If this is how American business thinks it’s going to survive the current economic crisis, then our country is headed off the cliff."
I was curious about the $12,000 balance. Where did that come from? "The reason we were doing this transfer is not because we had made excessive purchases last year, it was not because we had taken a holiday we could not afford; it was because my wife missed more than a month of work to be with a family member who had been diagnosed with cancer. We relied on credit to bridge the gap," Ryan says.
I'm not going to give Ryan a lecture -- because he doesn't need it -- but 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.
I'll give Ryan the last word.
"Our nation is scaffolding businesses that have failed to meet the most basic standards of financial diligence and those same businesses are turning around and punishing the very people who are their life support," Ryan argues. "If Bank of America is to survive, it is because people like us will continue to pay the bills. If we don’t (pay the bills), then they won’t (survive). You’d think that would be Business 101. Then again maybe it’s too much to expect a business that’s all but ran itself into the ground to understand the basics. That was, after all, their problem in the first place."
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