Credit-card industry snookers another customer, American Bankers Association [hearts] Washington

There’s no shortage of stories as of late about consumers getting bilked by credit-card companies: Bank of America has been raising rates for card holders with nary a blip in payment history, and many more card holders have complained about erroneous and inconspicuous charges appearing on bills from Citibank and Chase. Those ghost charges have caused jacked-up rates and tacked-on late fees that are nearly impossible to remove. Just last week Consumer Reports warned card holders to watch for changing credit-card terms.

These new fees and charges, of course, are coming from companies like Citibank, which announced in October of last year that it would have a 60 percent drop in earnings due to the subprime fallout it helped ignite. Now the banks are shifting the burden on to consumers in an effort to protect themselves from further charge-offs in the future. And financial industry analysts agree that if you’re a bank that’s deep in the hole, the easiest way to make money is to raise rates on existing card holders.

Sounds like whacked-out conspiracy theory? Enter this personal tale of credit-card shenanigans: Back in February, I paid off my entire Citibank Visa balance in full through a balance-transfer on a zero-interest credit card from another issuer. I had been a Citibank customer for four years; I had autopay, so I never missed nor was late on a payment.

In March, I get a bill with a weird finance charge of $49. I call Citibank, explaining that I’d paid the bill in full before the end of the billing cycle and that the charge was a mistake. I had a zero-average daily balance for the entire billing cycle. How could there be a finance charge? The customer service agent, with a number like 084, said, “I have never seen anything like this before. [Me: Uh-huh. Riiiight.] It will be cleared immediately.” Done. Right? Nope. Not even close.

Continued: Click “Read more”The charge was never cleared. This month, I find that late-payment fees were tacked on to finance charges (for a zero balance), the interest rate skyrocketed, and now I owe something in the range of the $200 mark. Again, this is for nothing — for a zero balance. To make matters worse, my totally 100-percent clean credit score has now been tarnished because Citi says I was delinquent on payments. On top of that, I could be hit was cross-default charges and raised rates from my current credit card because of Citi’s practices.

So far I have spent about four hours on the phone with Citibank customer-service reps, managers, and supervisors trying to fix this problem. On Friday, a very nice manager told me everything would be cleared “as a courtesy” and my account would be current. I couldn’t even begin to fight the whole “as a courtesy” concept, considering Citi had done the screwing.

Yesterday when I called to make sure everything had been completed, I was told that my account was reviewed when it was “delinquent” and that it would have to go before a “review board” before my interest rate was dropped to 6.9 percent, what I signed on for originally. Currently, they have it inflated to 22.9 percent.

Now out of anger and frustration, I want to close the account and have nothing to do with Citi again. However that also would negatively affect my FICO score, again giving Citi the upper hand.

The American Bankers Association has continued to oppose any legislation that would protect consumers from such shady credit-card practices. Both of the proposed credit-card reforms, the Credit Card Holder Bill of Rights and the Credit Card Accountability, Responsibility and Disclosure, or CARD Act, would protect consumers from things like universal default charges and any-time, any-reason rate increases. And both have been opposed by Republicans and the credit card industry. (Only one Republican, Rep. Christopher Shays of Connecticut, supports the Credit Card Holder Bill of Rights.)

Comprised of credit-card companies, banks, and credit unions, the American Bankers Association is one of the most powerful lobbying groups on Capitol Hill. During the 2006 elections, and during the tail-end of the unregulated-lending heyday, ABA’s total contributions skyrocketed over previous election cycles, with Dems receiving $1.1 million in contributions and Republicans $1.9 million.

Sen. Chris Dodd (D-CT), who chairs the Banking, Housing, and Urban Affairs Committee, is the top Senate recipient for ABA contributions this election cycle, with $14,000 in total donations. Dodd is also the senator who introduced the CARD Bill, which the credit-card industry is fighting.

As for me, I’m still waiting on a call back from another manager. My fifth phone call in as many weeks.