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Sep 12, 2008 8:45 pm US/Eastern
Credit Rating High? You Still May Be 'High Risk'
Banks Going After Customers With Good Records, But With What They Consider Questionable Spending Behavior
NEW YORK (CBS) ―
As more and more people struggle under credit card debt, delinquencies are at their highest in seven years. Now banks are stepping up their collection efforts – not just with those who pay late – but also targeting cardholders who've never missed a payment.
"It doesn't seem fair," says Eileen Perry, a consumer with stellar credit.
Eileen Perry says she has stellar credit. Even though she always pays her credit bills on time, consumer advocates say now banks are labeling her and millions of other customers with good records as high risk.
"They're looking at your behavior, looking at the behavior of other consumers and deciding, well, maybe you're getting too risky," says Geri Detweiler a consumer advocate with Credit.com.
Detweiler says if banks don't like activity on a client's credit card, such as too many cash advances, large purchases, or late payments, they are hitting customers where it hurts by decreasing credit limits and increasing interest rates.
"We've gotten a lot of complaints this year interest rates have gone from 9.9 percent to 26.99 percent overnight, and these consumers are saying, 'I've never paid a bill late!'" she adds.
Banks are also calling delinquent customers on the phone sooner and more frequently than ever before, often after just one missed payment. Detweiler says you may even find a card is canceled outright.
"Don't assume that just because you're a good customer and you pay your bills on time that everything is fine," she says.
But if you are struggling, experts say to sound the alarm. If you call early, now is the time when creditors say they're more open to negotiate a better payment plan. Some are even offering customers with big balances incentives to pay it off. Citibank, for example, will actually help you pay off your debt if you agree to pay a chunk of your balance quickly or temporarily stop using the card.
If you feel you are being harassed by a bill collector, under the Fair Debt Collection Practices Act, you are entitled to ask for details and demand documentation.
For more information on what your rights are and to find out exactly what your credit card company's policies are, use the following resources:
Fair Debt Collection Practices Act
American Express Card Center Bank Of America: Consumer Credit Cards Discover Credit Card Assistance Chase Bank: Setting Up Hardship Programs
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