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banking:filter:What, if anything, should I do about BofA closing/cancelling my credit cards ....because I paid them off?
February 26, 2010 3:54 AM   Subscribe

I had two Bank of America credit cards. Both were of the high interest types (21% and 25% interest). I owed in the area of 5 thousand dollars total and I knew that it was time to bite the bullet and take the money out of my savings to pay them off. I may have been late in payments a few times (not often) and usually I only paid the minimum payment due. I naively thought paying them off completely would be viewed as a positive thing. I paid them both off just days ago.

Today I received a phone call from someone identifying herself as from Bank of America. She insisted that I give her "updated income and credit information" over the phone. I told her that I did not understand why she should need any updates. For one thing, my caller ID did not read "Bank of America" and I was reticent to give information over the phone. It could have been a scam and I have never been asked for additional information from a credit card company before. She was extremely rude and told me that I will be getting "new information" about my cards in the mail.

Suspicious about her threatening tone, I then made a trip over to my branch of Bank of America. I met with a banker and learned that after this Bank of America phone call my cards were both immediately "blocked" ("closed").
The in-person banker put me on the phone with a higher up and it was explained to me that "they" (the rude woman I spoke with earlier) had done a "review" of my account/credit report and because I have another high balance at Wells Fargo Bank she elected to "block" any further charges on my Bank of America cards and extend no further credit to me.

I have very little debt and I am not late on payments. My Wells Fargo card is indeed close to it's limit. The original BofA rude woman had asked for my income information, but I did not give it to her. My income is modest, but my credit cards both had plenty of time left on them (expiration dates not even close to the end).

I asked if this "blocked" status will have a negative affect on my credit rating and the answer was "probably" (!) The Bank of America representative haughtily told me that they will re-consider me if and when my balance with Wells Fargo is not so high. All this occurred because I paid off two cards in full.

I have been with Bank of America for many years and one consumer website indicated that it might be a good idea to complain to executives at the bank..but it is difficult to complain when I am completely uncertain about what the bank did that is wrong. It certainly SEEMS wrong, but without a regulation to cite I don't know how to complain. Perhaps there is something in the teensey type on my credit card agreement that indicates that they can cancel my card anytime. I wouldn't be surprised.

Do you have any light to shed on this for me? I am working on living without credit cards, that is my aim..but meanwhile, if any of my rights have been violated, I would want to complain to the correct agencies and also know exactly how to craft my complaint. Tough when it seems as if the bank has all the rights and I have none. Any advice you can give...is appreciated.
posted by anonymous to Work & Money (22 answers total) 6 users marked this as a favorite
 
Close your accounts with BoA and move your money and business to another bank, perhaps a credit union or local bank. Large banks like BoA own pieces of the government and the laws. That's probably the best you can do, realistically.
posted by Blazecock Pileon at 4:01 AM on February 26, 2010 [15 favorites]


I am speaking without the expertise of an insider in the industry, but anyone can tell that this is a time of uncertainty among large credit-card issuers. To my mind, the answer is to look to the small issuers. Find a credit union that you can qualify for and that issues credit cards.
posted by yclipse at 4:04 AM on February 26, 2010 [1 favorite]


Close all of your accounts with this institution. Explain why, if they ask. Go about your business.

It is almost certain that they can cancel your card whenever they want, pursuant to the "teensey type" on your credit agreement. If you are not on top of that, you should be prepared to cop it sweet. The only incentive they have to treat you decently is the promise of your future business - it's a fair bet that the details of your credit agreement (being that pro-forma that THEY WROTE) will not be in your favour.
posted by pompomtom at 4:38 AM on February 26, 2010 [2 favorites]


The Bank of America representative haughtily told me that they will re-consider me if and when my balance with Wells Fargo is not so high. All this occurred because I paid off two cards in full.
In a vacuum this is a good policy. A person with a maxed-out credit card is possibly a bad credit risk.

But that's not what happened to you. You had three maxed-out credit cards, and you paid two off. That makes it plausible that you're a good credit risk, and if somebody loaned you money they would probably get it back.

The trouble is that credit card companies aren't in the lending business to give you money and hopefully get it back from you. They want to lend you money and get back more than they gave you. You were making minimum payments on a $5k balance at 20% interest. That's $1000 per year income to your bank, until you make progress on your balance, which will never happen on the minimum payments. You paid on time, so you were low risk. You were a profit center. Now you are not, and they no longer want to deal with you.

If you want to fight to have these slimy folks extend you credit, you probably can. If you just need credit, yclipse is wise to recommend a smaller issuer. If you are all done with them, close any deposit accounts you have and tell them why.
posted by fantabulous timewaster at 4:53 AM on February 26, 2010 [8 favorites]


Credit card companies are doing this all over the place. Consumer lending has taken a beating in the last 18 months, and they're looking at ways of minimizing their exposure. You, unfortunately, count as an exposure, because even if you haven't actually cost them money yet, you're one car accident away from default.

A common practice with people who gradually paying down debt is to lower their limits every couple of months, so that they can only ever add a few hundred bucks to their current balance. "Blocking" the accounts seems a little extreme, but you don't actually have any right to be lent money.

This is legal. It's in your card services agreement, the one that no one ever reads. Sounds like this lady was a jerk about it, but yeah, they can do this. You don't like it, well... I'd tell you to go somewhere else, but you're going to have a hard time finding a major credit card company that doesn't do exactly this. Easy access to credit isn't a right.
posted by valkyryn at 5:27 AM on February 26, 2010


If you have a checking and/or savings account at Bank of America, I'd go in person and cancel them, and when asked, describe your situation above.
Sometimes you don't get their attention until you're walking out the door with your money.
Find a nice credit union to do business with, and focus on paying off the Wells Fargo card.
posted by willmize at 5:40 AM on February 26, 2010 [1 favorite]


Get rid of your BofA accounts. Their banking practices are horrible. From overzealous use of fees, to excessive percentage rages, to incredibly rude customer service personnel. You have the choice to take your business elsewhere, do it.

I encourage everyone stop doing business with BofA. There are plenty of other banks, nearly all of which suck less than Bank of America. And they'd be glad to take your business.
posted by wkearney99 at 5:45 AM on February 26, 2010 [10 favorites]


s/rages/rates but the slip seems appropriate.
posted by wkearney99 at 5:46 AM on February 26, 2010 [1 favorite]


BoA totally screwed me over with various fees etc.

I went credit union and never looked back.

My credit union is super awesome. They don't even have that many offices, but they have a deal with other credit unions so I can use those ATMs to make deposits etc.
posted by sio42 at 5:55 AM on February 26, 2010 [1 favorite]


the credit union might even be able to get you a better deal on that WF card so you can transfer the balance and pay it off.
posted by sio42 at 5:56 AM on February 26, 2010


If you're eligible, USAA has fantastic customer service, which makes up for the occasional hassle of not having local branches.
posted by electroboy at 6:11 AM on February 26, 2010 [1 favorite]


Dump them.... and while you are at it, pay off the rest of your debt ASAP too.

Then shop around until you find a card and bank that you like.

They probably red-flagged you because, after carrying a balance so long, you suddenly paid off one card - your financial pattern changed. IT sounds weird, well it IS weird, but with a country so deep in credit card debt, and banks so messed up, weird things are going to happen.

You already took the first great step - taking money out of savings to pay off high interest credit.... keep going :)
posted by TravellingDen at 6:23 AM on February 26, 2010


Yeah, close them out. I went to close mine out in person thinking they'd ask what the problem was (this was three years ago!), and they didn't even flinch. I suppose they must be so used to people closing out accounts, that they just don't bother to ask anymore.
posted by Grither at 6:23 AM on February 26, 2010


You know what? What they did is probably legal, but "good business" doesn't consist of doing everything one can legally get away with to inconvenience one's customers.

There's no reason you shouldn't call or write an executive to complain.
posted by amtho at 6:49 AM on February 26, 2010


I have had immaculate credit for many, many years and have been treated shoddily by Bank of America's customer service several times recently - pretty much since the financial crisis began. Trying to register a complaint has been difficult, frustrating, and has always felt futile.

So I am in the process of moving my business to other banks' cards. I don't expect BofA will notice, but if enough people do this, I have this vague hope they might change their ways. (Cynically, I expect it's more likely they'll just give their top execs bigger bonuses and keep on doing the same bullshit they're doing now.)

What Travelling Den says about your pattern having changed is probably accurate - the tracking, monitoring and evaluating of accounts is totally automated, and I get the impression there's little or no human involvement in most decisions on changing accounts' statuses. The huge financial software system makes its decisions and updates, leaving the long suffering third-world customer support reps to clean up the mess and take the angry venting from customers.
posted by aught at 6:51 AM on February 26, 2010


It's legal, but....it's kind of dickish. I also had a high balance on a Citibank credit card with a higher interest rate -- and got a good deal on a balance transfer from another card, so I transferred the whole balance over from the Citibank card. I also use Citibank for everything else (checking, savings, etc.).

Citibank didn't even blink -- in fact, when I called a week later to ask them something else about my card, they answered my question, and then thanked me for my loyalty in maintaining my account with Citibank. (I've had the Citibank card for over 20 years.)

So they may indeed be within their rights to get weirded out because you did something way different from what you usually do. But they handled being weirded out really badly, and not all banks do that.
posted by EmpressCallipygos at 6:54 AM on February 26, 2010


I'm not an expert, but some of the advice in this thread would be harmful to the OP's credit. BoA may or may not have worse practices than other credit card issuers, but walking away now will leave those lines of credit listed as closed by creditor, which is absolutely a hit on their credit. Frankly, most people who post credit questions would be much better off at creditboards.com where there are people who seemingly devote their lives to gaming the FICO and credit systems. There is undoubtedly a formal appeal process and the OP would be best served by getting her credit line reduced but left open. That would still be a hit to their credit score, but better than things stand now. Length of credit history and credit utilization (amount of available unused credit) are huge factors in your FICO score. If you want to leave BoA, get your cards reopened (if you can) and then close them at your request. If you can't google the right place to appeal the decision within BoA, I'd post or search on creditboards, where I am sure someone knows.
posted by Lame_username at 7:01 AM on February 26, 2010 [7 favorites]


Due to the new credit card laws, they can't look at other cards and screw you over at your BOA card.

But seriously, switch, they're being turds (Plus their FDIC $250k insurance is being lowered to $100k. To me, that doesn't bode well for their future).
posted by stormpooper at 8:05 AM on February 26, 2010


What Lame_username said. Please do NOT close your credit card. Close your other accounts with BofA and go elsewhere, but do not close the card. It sucks that BofA is huge and megalithic and institutional and that they engage in unethical if legal behavior, but closing your credit card will make matters worse for your credit score. I'm speaking from experience.
posted by blucevalo at 8:40 AM on February 26, 2010


If you're eligible, USAA has fantastic customer service, which makes up for the occasional hassle of not having local branches.

Seconding this. I'm a member through my wife, and I have nothing but good things to say about USAA.
posted by lex mercatoria at 10:48 AM on February 26, 2010


Related. If your credit score is particularly problematic or vulnerable it may be a bigger deal but I never gave any consideration to the effects on my credit rating of canceling accounts etc., I closed cards and let cards get closed, and my credit is fine. It is all a bit voodoo but it seemed to me, last time I carefully reviewed my credit rating, that, with an essentially clean payment history (slightly late stuff I got dinged for with a late charge or whatever never showed up on my report), the effect of account closures etc. was dwarfed by the major factor of simply how much debt I was already carrying.

Your experience seems pretty typical of the trends lately. Card companies are desperately trying to raise revenues and cut out risks. They're stupid too; Discover canceled an ancient card on me due to long account inactivity and now sends me 1-2 mailings per month exhorting me to open a new account. Don't take it personally, all you really dealt with was lousy customer service from some peon... and you should really be concentrating on paying down that Wells Fargo balance anyway. What you do about the currently closed BOA accounts is probably not that significant in the broader scheme of things. Personally I'd just ignore them. If you must have another credit card you can find a more amenable creditor, probably in a lot less time than it takes to try to get BOA to see reason.
posted by nanojath at 11:28 AM on February 26, 2010 [1 favorite]


One more note: a few months after you drop the BoA card, check your credit report. Chances are good that they will falsely report the card as having been canceled by the lender (BoA) instead of the borrower (you).

A letter to the credit reporting agency stating this to be false, and demanding that this be corrected if proof is not provided (to you), will compel compliance. Send the letter by registered mail, so that you have proof of when you sent it, which will also warn the credit reporting agency that you mean business about the legal deadlines for their compliance.
posted by IAmBroom at 8:39 PM on February 28, 2010


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