You’ve seen the pricey new ad campaign aimed at convincing you that your credit card companies are there to help you in difficult times. The ads give the impression you can call your credit card provider and the company will reduce your payments because you are in the midst of a financial crisis. Beware of wolves in sheep’s clothing. I examined every aspect of the Help With My Credit website. This is a public relations campaign: thick on words, thin on substance, and not helpful to most individuals or businesses thrust into a financial disaster.
The major financial institutions, which provide most credit card accounts — Bank of America, Capital One, Citigroup, Discover, and MasterCard — have been eviscerated in the press and in Congress recently for their wide-ranging mishandling of business and consumer lending. Some of the most egregious offenses for customers who have never paid late or done anything to warrant punitive action: refusing to make loan money available, lowering credit card limits and raising interest rates to levels once classified as criminal loan-sharking. These banks are in a virtual hot seat with the public. Congress is furious because their constituents are angry. And the Obama Administration wants financial institutions reined in on a short leash with stringent regulations.
Bank of America, which accepted $45 billion in taxpayer bailout money to stay afloat, is paying for the ad campaign. It appears that ‘we the people’ are funding this misleading advertising and public relations brouhaha designed to make us believe credit card companies care. It’s one more example of financial institutions trying to deceive the public at our expense.
The Obama Administration and many Members of Congress favor a credit card holders’ bill of rights, which would eliminate banks’ abilities to engage in loosely regulated practices which hurt borrowers who don’t understand ‘secret’ rules of the credit card game. On the ‘Help With My Credit’ website, credit limits are discussed:
“Every credit card has a limit of how much money you can charge. Going over this amount will accrue a fee and increase your interest rate. To avoid this, keep a record of your spending, and check your balance online or over the phone. Remember that some merchants, such as hotel and car rental companies, put a “hold” on your credit card based on their estimate of the amount you will charge. This can reduce your available credit until the final charge is processed.”
What the issuers of credit cards never tell you: your credit limit on anything but commercial accounts is bogus. When you use more than 50 percent of your limit on an account, your credit ratings start on a downward spiral. Use your full limit and your credit scores are likely to drop 100 to 150 points. See my column, Four Updated Personal Credit Rules.
When you go to this bank-sponsored website looking for help, there is an online questionnaire. I answered using multiple factors to determine their advice under varied circumstances. If your only problem is credit card debt to a couple of banks, which are their co-sponsors, they provide you with the phone number to ask your bank for help. Readers tell me help is limited. If you need a slight payment adjustment for a limited period, they’ll work with you. If you need a drastic reduction or payment suspension because you have no income and you’re trying to stay afloat, it appears they’re not accommodating.
Most people who lose a job or have a catastrophic medical event owe more debt than credit cards. In all cases where you have multiple debts, the website recommends you see a credit counselor. They list a wide range of credit counselors, including a member organization that requires no proof that firms adhere to high ethical standards. Since the credit counseling industry is populated by many dishonest companies, which prey on people who are desperate for help, it is another strike against Bank of America (and the other sponsoring financial institutions) that they are not doing their best to protect the public from crooks. The website does provide a list of questions to ask any credit counseling firm before contracting with them. However, it is naive at best and dishonest at worst to believe that shyster-operated firms don’t lie when they answer these questions. Most of us would have no idea we were being lied to by someone involved in a credit counseling scam.
In previous columns, I have recommended finding a local member of the National Foundation for Credit Counseling. Their members must prove they conform to high ethical standards.
In this troubled period, when we’ve exceeded 5 million jobs lost since December of 2007, you need access to straightforward, helpful credit information. You won’t find it on Help With My Credit.