Wednesday, May 4, 2011

Angry Enough to Finally Walk Away

No, not from my job -- though I could understand if my recent posts might have led some of my readers to conclude that. I think a summer break will put things right for a while on that score. No, I'm talking about walking away from a fifteen-year relationship. With a credit card.

Tenured Radical has a nice post up about graduation and debt. And I realize that I've never really talked much about my own debt. I think I'd like to write a longer post on this someday, but right now, I just want to talk about getting out of one financial relationship that has become particularly abusive.

Last night, I opened a backlog of mail. One of these was an "account update" from Really Evil Bank.** REB was, I think, fourth in a line of banks that bought my credit card account from the original folks I carefully selected back in 1997. That's right: I've had this account in good standing for almost 15 years now. And last night, I read that they've just changed the rules: if I make a single late payment, ever, my interest rate goes up to 29.99%, indefinitely.

You read that right: fifteen-year credit history with this card, credit rating of 750, permanent address and professional job of 8 years' standing, but I can still be charged 30% if, in the future, I slip up once. And you know what I realized? Abusive (but legal -- legal, I tell you!) practices like this only exist because the people perpetrating them know we will put up with them.

The only way this can change is if I get out from under them. Up until now, I've needed this company more than they need me. They've given me a humungous credit line, and I've done just what their analysts likely predicted I would: I've used it. This credit card has paid for everything from hospital bills to groceries, not to mention god only knows how many self-financed professional conferences and overseas research trips. I've established a ridiculously good payment history with them. Up until now, though, I've been stuck with whatever they dish out (refusal to negotiate a lower interest rate? 50-cent surcharge for months when I don't carry a balance?) because I've been carrying a debt with them so high that I couldn't pay them off and walk away. But through various machinations, I'm now perilously close to having this credit card paid off for the first time in over ten years. And when that happens, I'm canceling the thing. I'm done with REB, one way or the other, by September 1. Maybe sooner.

Summary: The only way not to lose here is not to play. Come September 1, I'm out. See if I don't.

**Unnamed here, but you know the big giant one whose mortgage division you keep hearing about in the news, where they deliberately jerk around people trying to use the law to refinance so they don't lose their homes? Yep, those guys are the current holders of my credit card, and I'm upset that I'm giving them even one dime of my money.


amyp said...

I'm not sure what Big Giant Bank you're referring to, but my BGB did the same thing. And then they moved my payment due date from three weeks or so after the statement date to ten days after the statement date (without telling me other than just changing it on the statement), so that I paid late without realizing it.

I have now dumped BGB and belong to a credit union.

Dr. Crazy said...

FWIW, if you cancel the card, your credit score will take a hit, from what I understand about how such things work. Better to keep the card active and to charge something for like 10 bucks on it once a year and pay it off immediately than to get rid of it. YMMV

Notorious Ph.D. said...

I had thought about what you said, Crazy. But I hate these guys so much that I just want to get them out of my hair.

I may make an appointment with a financial advisor at my credit union to talk about how to proceed.

--Hed said...

You go girl! There is no need to further their ability to treat you and other customers unfairly! If you can dave ramsey your way it out of your life, do it to it!!

Historiann said...

I love your title for this post. Cut the cord and move on.

Janice said...

Good on you! I have my credit card with my bank (they're all big in Canada, unless you go w/credit unions, but they're far more regulated than in the US), but I would leave them in a minute if they treated me so badly.

That said, being out of CC debt is the best solution of all. Sadly, as long as conferences require us to pay our registration a year or nine months before the meeting, we end up carrying a lot of charges that will only distantly be repaid by employers, if at all!

squadratomagico said...

On a more positive note: Many congratulations for coming "perilously close" to being out of debt! How great!

After that: dump the bastards!

Notorious Ph.D. said...

Oh, not debt-free, Squadrato. Not by a long shot. Just free of this particular debt.

And it turns out that I've got about half of my summer research trip covered by crashing with various friends in various cities. How cool is that?

Anonymous said...

Good for you! Good luck!

Btw, get rich slowly is a great personal finance blog if you want tips and suggestions and stuff.

squadratomagico said...

Oops! Sorry -- I thought you had consolidated everything on that card. Well, congrats on nearly getting that one paid off, anyway!

And, I meant to add: 30% interest is really legal? Man, those penitentials were on to something when they banned usury!

Anonymous said...

"Sadly, as long as conferences require us to pay our registration a year or nine months before the meeting, we end up carrying a lot of charges that will only distantly be repaid by employers, if at all!"

And the same thing with plane flights to the conference. Is there a way around this, like by reserving directly with the airline, for example?

Digger said...

Congratulations, and kick 'em to the curb. Alas, I just opened accounts with BGB, but that was because I *needed* a new bank account, and they have branches where I'll be moving. I don't expect a long term relationship with them, though.

Contingent Cassandra said...

One feature you might want to look for in a new card issuer: the ability to set up the automatic withdrawal of a chosen payment (minimum, full balance, or a fixed amount) from your bank account each month just before the payment due date. It doesn't keep the issuer from being evil in other ways (if you find a non-evil credit card issuer, please let me know), but it does provide a mechanism for avoiding late charges and interest-rate hikes. Definitely more reliable than relying on myself, or any reminder system I can construct, to keep track of things, especially toward the ends of semesters.

And my understanding is the same as Dr. Crazy's. There are now two accounts I've had so long (since college), that I'd be hesitant to close them unless I was very sure I wouldn't be applying for credit for a while. But there is the principle of the thing. . .

Anonymous said...

I wouldn't worry too much about closing it so long as you have other credit/loans that you're paying off on time.

Capital One, my oldest card by several years, closed on me because of non-use. Two years later (when we refinanced) I had a credit score over 800.

The credit score will recover. There's no real reason to close the card either unless they stick an annual fee on you. Eventually they may close it for you, but it may take a while.

Tenured Radical said...

And who *cares* if your credit rating takes a hot? So you can get a mortgage for the Palm Beach property?
Doubt it.

Do it. I paid a big bill today on a BOA cc --almost $1K that I ran up last month going to a conference. Got reimbursed, paid it off. They "made an error" and took the payment out of the wrong account and charged me a bank fee of $35. Took about 20 minutes to sort it out.


Bardiac said...

Congrats! And yes, by all means, drop the card. I've dropped a couple cards in the past, and the credit score was fine. (I had a stupid idea as a grad student that it would be amusing to have more credit available on credit cards than I made in a year. It only took three cards, which says something about easy credit in the late 80s/90s, and also something about how little money I made in a year.) I dropped all three cards and changed to a different one associated with my mortgage lender that pays the bonus thing towards the mortgage. I had never used the bonus thing on the others, but this one has been quietly helping with the mortgage.

Anonymous said...

Transfer the balance, keep the card. Even with $0 on it, you'll be costing them a bit, but won't be risking the hit. You *will* take a massive hit from FICO if you cancel the card, and it's not just about buying a house. Even crap like non-emergency medical care can look at that stupid number when determining a charge.

I have a card I picked up while in college in Puddletown that I've not used in 4 years now, but keep because it makes my credit history so long.

Call if you want to get into the nitty-gritty. I understand this crap more than I wish I did. Or we can talk if I ever manage to get out to where you are and visit. (There. Now you'll know who I am.)