Counseling For The CC And Pray My Interest Is Slashed?
Q: I receive a letter on the 15th of October saying that my Providian CC was sold to another Providian branch. I was told to destroy my old card and promptly start using this one. I was also told that I could not continue making my payments online @ providian.com.( My payment is due on the 22nd, mind you.) This 'eMerge' card smelled very fishy and I called to find out where to send my payment off since no longer able to do it electronically. I KEEP GETTING PEOPLE IN INDIA! They won't tell me when Americans answer the phone, they won't do anything. After much ranting and raving I have found out that they have SLASHED my available credit and jacked my interest up to 29.9%!! I am at my wits end, I am stressed, recently laid-off and unemployed. I just cannot phathom how they could do this to a person that has NEVER paid late or missed a payment during the entire history of the former card. Here are the facts: 1) I cannot apply for a balance transfer with another company without a job. 2) The balance is in the thousands and is my highest limit 3) I didn't apply for another CC while employed because I wanted to focus on getting OUT of CC debt, plus I just purchased a home. 4) I don't mind surrendering the card. PLEASE HELP ME, I don't know what to do. Is there somewhere I can call and complain about the constant transfers to India? Has anyone been in this situation and can help me with any tips or advice? Should I go into debt counseling for the CC and pray my interest is slashed?
A: Get on the phone to Concumer Credit Counseling. They are free and will handle a lot of the problems for you, give you decent advice. Credit card issuers can get away with such tactics because "we the people" keep voting in federal politicians who value the campaign donations from these companies' chief officers more than they have concern for the average consumer. Now with a Republican controlled Congress and a Republican in the White House, it won't be long before legislation is passed that tilts the advantage even more toward the credit companies' benefit, at the expense of honest consumers. Look in the blue pages section of your local telephone directory for a consumer affairs office or check your state or community's web site for the information. Most communities have a consumer affairs agency where people can go for advise in dealing with just this type of problem. Not really - on what grounds would you complain? A company can put its call centers wherever it wants. I'm surprised you could tell it was India. The people are usually trained to lose their accent. And as long as they answer your questions, why do you care where they are? Yes. Cancel the credit card, too. Hold on there... Consider a few things before you dive head first into this... Providian dumped a lot of their sub-prime credit cards to a company called Compucredit (Here is the news release: http://investor.compucredit.com/news/20020625-83573.htm). I'm assuming you have pre-existing credit problems because you hold a sub-prime card. (Sorry if that is not the case). What is the amount of your total debt? You have got to crank the numbers on this. How long to you think you will be out of work? CCCS is great for people with future earning ability, but there is a point when that is not the best direction to go. Even if Providian slash your 29.9% interest rate, you will still be with a very high interest rate. CCCS will negotiate a payment schedule for you, but if your debt is to the point that it will take you 25 years to pay off and you won't see your income increasing during that time, then CCCS is not the best solution. If you own a home and you have equity on it, you can try to cash that in and pay off the credit card and deal with a lower interest rate. Obviously that is probably not the case for you, or you would have done so. I hate to suggest bankruptcy to people, but you have to consider how much can you pay CCCS and how long your payment schedule will be. That is extremely drastic, and it will damage your credit severely for the next 7 years. However, the payments to CCCS are going to last 20 years, and you don't see your future earnings rising to the level that you can reduce it, then it's something you need to talk to your advisor about. I agree with those who have pointed out the limitations of CCCS. From what I understand, they won't suggest the option of bankruptcy, even when the client's debt is obviously too overwhelming to pay back without causing severe hardship. While I know it can be very helpful for those with more moderate debt, CCCS can only reduce your monthly payments so far, and if your debt is large, it may not be enough. Here at Damage Controls we get consumer emails every day. Although we are a watchdog group, our research indicates that certain companies will string you along with Consumer Credit Counseling. Sears and Credit First - Firestone are notorious. Some companies and banks will not participate if the service is a "for profit" such as an attorney. Television commercials imply that a consumer can be debt free in 5 to 7 years, but to reduce your payments there is a trade off. If the consumer looks at the companies that will actually reduce the interest rate, and the companies that won't reduce the interest rate, it leaves the predators like Sears, Household, CitiFinancial and Credit First demanding more of your main monthly payment to the CCCS. Check your credit report after joining any program. After 12 months one consumer reported that Firestone showed them late every month after entering CCC. We validated this credit report and spoke with Credit First / Firestone. Amsouth Bank would not reduce anything for the CCCS. And Sears will show up in bankruptcy court to ask for your used car battery before you drive home. Household is another beauty. CitiFinancial will give you a settlement offer of like $3200 for a $6000 account, take your money, then bill you for the additional $2800 anyway. Watch them. Some credit card companies will try to get your money on a check-by-phone, tell you the call is being recorded, then bill you again next month and tell you there is no record of anything but your last payment. Watch them. All valid settlement deals must be done by mail or by fax to protect the consumer. Now here is how to see what goes on behind the scenes. Call each creditor and tell them you are unemployed, want to do the right thing, and offer a settlement on each account. If the companies transfer you to the right department and send you paperwork, they may be able to help you with CCCS as well. Tell them if everyone doesn't go along with the settlement requests you will consider bankruptcy - call their bluff and be firm. Someone at one of the companies will probably ask you who your creditors are and will comment if they see a Sears, Household, Credit First, etc. They know the deal. Talk to them like they can help you and are concerned. Be nice. Determine which companies won't deal on a settlement offer. They will be the same ones that will hurt you on a CCCS deal. CCCS organizations are paid by the credit companies, thus they are non-profit. Some companies won't play, don't join, and want to handle their own collections. Most will think you are just trying to scam them with a song and dance about a settlement, to pay what you righfuly owe, but to do it at a discount. Get past that and persist. Make a list of the companies that tell you they don't have a settlement department. So, at little detective work, a little time on the phone, talk with the CCCS people, then calculate the actual payback time, amount, and cost. Then decide what to do. If a consumer joins a CCCS program, some companies tell them if they quit the program they can't join another program. Ask them this: "If you didn't disclose to me in my loan papers that you only deal with "not-for-profit" consumer credit counseling programs, why penalize me for switching to such a program now? Seems we have a litigation issue now." The point is, be careful. You can change programs, but again this is just an enabler for those companies that wouldn't work with you to begin with. Otherwise, you could