Joe and Josephine of Sacramento, CA

"…faced with paying either the mortgage on a house that will never sell at a profit or his assisted living expenses, he had no alternative but to stop paying the mortgage." —Josephine

Many of America’s senior citizens are caught between a rock and a hard place as the devastating effects of the mortgage foreclosure crisis have hit this community. Faced with the difficult decision of continuing to pay for an “underwater” mortgage or to sell his home at a loss, Joe B. a 90-year-old retired British army veteran from Sacramento, California, is now facing foreclosure as he struggles to pay for his assisted living expenses. The sale of his home was supposed to pay for his continuing care, but the house has been empty for over a year, and his expenses have depleted his reserves.

Joe’s daughter, Josephine, has been fighting to keep up with her 90-year-old father’s finances. His 2-bedroom Sacramento, California home is currently two months away from foreclosure—a victim of slumping home values in the area. His home which was once valued at $189,000 a year and a half ago, is now listed at $118,000 (a 37% decline). His realtor says that similar homes are selling for $25,000 to $30,000 less. Any price much less than the currently listed price will not cover the mortgage, closing costs and realtor’s fees.

Sacramento has been hit hard by the foreclosure crisis as well-kept homes like Joe’s compete with abandoned, boarded up homes that are in a state of disrepair. As foreclosed homes are offered by banks at rock-bottom prices, many long-term owners needing to sell face the prospect of losing huge sums as the amount of their mortgage exceeds the going value of their home.

A year and a half ago, Joe refinanced his mortgage and took money out to pay for assisted living costs of $2700 per month. He never imagined that a year and a half later the house would still be on the market, worth less than the mortgage. The original plan was to have his home sold by now to pay for his desperately needed assisted living costs. His fixed income of $1000 had been supplemented with money from the refinance to cover his mortgage, home expenses, and assisted living care; but now that fund is completely gone. Josephine explains that “he kept paying all expenses as long as there was something left from the refinance funds, but faced with paying either the mortgage on a house that will never sell at a profit or his assisted living expenses, he had no alternative but to stop paying the mortgage.”

She explains that basic needs have been minimized in order to cover the bare necessities of Joe’s budget. But Joe is still being billed for taxes, utilities, and sewer charges. Josephine explains that she has even asked the city to stop charging for trash pickup—because there is no trash, as no one lives in the house—but was told that it is a mandatory charge that must be paid.

She hopes that Congress will take up the fight to stem foreclosures because of the effects it has on seniors and their families, and hopes that they will “fight the battle seniors can’t fight for themselves”

Johnnie Lee Bussie

"You don't want to lose what you already got, because it's hard to start all over again." —Johnnie Lee Bussie

Watch Video »

Johnnie Lee Bussie is 73 years old and lives with his 78-year old disabled wife in Atlanta, Georgia. The Bussies are in danger of losing the home they have owned since 1999. In June 2005, the Bussie's then existing mortgage loan was refinanced by a lender with two complex loans that are now in default and the subject of this foreclosure. The Bussies say that the lender failed to explain to them that it was extending them two mortgage loans with two separate monthly payments. The Bussies thought they were getting one fixed rate mortgage. Instead they were given an adjustable rate mortgage with a low "teaser rate" for two years which meant that the low initial payments were only temporary. They also were given a second loan from the same lender which will require a balloon payment of $24,400 at the end of 15 years. When the loans were made, the Bussies were living primarily on fixed retirement income. When the payments went up after the first two years, the Bussies couldn't afford the payments and were facing a March 4, 2008 foreclosure. They were able to stop the foreclosure when they obtained a loan modification from the lender. However, even with the loan modification, the Bussies have not been able to afford their loan payments and are now facing foreclosure once again. Their lawyer has been trying to save their home and has offered to settle their two mortgage loan obligations with a short pay-off using with the proceeds of a FHA-insured reverse mortgage. On December 9, 2008 the lender refused this offer.

Vernon Frontz

"If I didn't live here, I'd have to go to one of these senior citizen homes and live there . . . I'm very depressed about the situation." —Vernon Frontz

Watch Video »

Vernon Frontz is 92 years old. As of January 30, 2009 Mr. Frontz is on the verge of losing his Atlanta, Georgia home of 44 years to foreclosure. Mr. Frontz had existing mortgage payments of approximately $900 per month. In 2007, Mr. Frontz was sold a new 40 year adjustable rate mortgage by telephone. He said an individual called him offering to refinance his existing mortgage with a new loan with lower monthly payments. Mr. Frontz said it sounded like a good offer and agreed to a new loan with monthly payments he thought he could afford.

Mr. Frontz said he was shocked to learn that the low monthly payments he thought he would have for the life of the loan were only initial monthly payments and that his Minimum payments would go up one year after the loan was made. He said that a few months after he got the loan, his daughter reviewed his papers and told him that the loan application had incorrectly listed his monthly income as $4,480. Mr. Frontz said he had no idea where that number had come from, especially since his only income, from a railroad retirement pension and other social security income was only about $1,400 per month.

Mr. Frontz' daughter then consulted a lawyer about her father's mortgage and discovered that he had been given an Interest Only Pay Option, 40 year, adjustable rate mortgage (ARM) in the amount of $231,000. The first month's payment on the mortgage starting April 1, 2007 was $669.52, which was based on the teaser rate of 1.75 for the first month only. After that, the minimum payment was still $669.52 for the remainder of the first year. However this payment amount no longer paid the full amount interest accruing monthly. As a result, even though Mr. Frontz continued to make mortgage payments, his loan was negatively amortizing which meant his principal balance increased each month that he paid the minimum payment, slowly reducing his equity, even while he was making payments. Further, once Mr. Frontz' principal loan balance reached 115% of the principal amount borrowed, a certain eventuality given the negative amortization feature of his loan, his minimum payment would increase substantially, making it even more difficult for him to pay this loan.

According to the loan terms, on April 1, 2008, one year after the loan closed and every year thereafter, the payment amount would change. After the first year, his minimum payment increased to $719.73 and he could no longer afford the payments. After the first three years of the loan, Mr. Frontz will be obligated to make a minimum payment of $1,958.55 for the next 37 years, on an income of about $1,400 per month. Additionally, Mr. Frontz will have to pay a $6,121 prepayment penalty if he refinances the loan before February 27, 2010.

Mr. Frontz' lawyer has offered to use the proceeds of a reverse mortgage Mr. Frontz' has qualified for to pay off the delinquent mortgage. As of January 30, 2009, the lender had refused this offer. Mr. Frontz is fearful that he will soon lose his beloved home in foreclosure and have to spend the rest of his days in a senior citizen home.

Eloise Grant

"I found a notice on the door that said the property was in foreclosure. I didn't know what to do." —Eloise Grant

Watch Video »

Eloise Grant is 67 years old. Until January 2009, she resided in a home she rented in Elk Grove, California. Shortly before Thanksgiving in 2008, Mrs. Grant was surprised to find a notice posted on the outside of her home. The notice said the house she was renting was in foreclosure and would soon be sold. Mrs. Grant said she always paid her rent and her landlord had never told her there was a problem.

Mrs. Grant said she called the number listed on the notice and the person with whom she spoke told her that she had better move her things out of the house because she might find all of her belongings on the sidewalk after the sale. Frightened and confused, Mrs. Grant did everything she could to keep life as normal as possible for her household even though she knew she would have to move soon.

Mrs. Grant's home was the family gathering place for her adult children and many grandchildren. She wanted to find an affordable home in the same Elk Grove community so that the children in her care would not have to change schools and move away from their friends. While shouldering the burden of finding a solution, Mrs. Grant said that her hair began to fall out and she unconsciously held her breath on many occasions.

After much searching, Mrs. Grant was unable to find suitable rental housing until her niece offered her home in Sacramento, California. Mrs. Grant moved to Sacramento shortly after the Christmas holiday, where the children under her care now attend school.

Tomás Hernandez

"It didn't turn out the way they said it would. The only option we have is to leave our house." —Tomás Hernandez

Watch Video »

Tomás Hernandez of San José, California is a 42 year old Spanish-speaking first time homeowner. He has struggled to make his mortgage payments on a refinance loan. In January 2009 he missed his first payment and is now in default. He and several other San José, California area Hispanic residents have sued the loan broker, the loan brokerage company, the real estate agent, the private lender and several others involved in the purchase and financing of their homes. They say that the defendants in their lawsuit were involved in a conspiracy targeting Hispanic households for predatory loans. The suit was filed on October 22, 2007 in United States District Court in the Northern District of California.

This is the Hernandez family story, according to Mr. Hernandez and the court documents in the lawsuit. In approximately October 2005 Mr. Hernandez and his wife wanted to find out if they were qualified to buy a home. They were referred to a local Spanish speaking real estate agent who markets her services to Latino families. They contacted the agent to inquire but then did not follow up. After a month, the agent invited them to meet with her. They accepted and said the agent checked their credit and told them they had good credit. When she asked them about their total monthly income, they said it was approximately $6,000 to $7,000 per month. The Hernandezes say they told the agent that they could only afford a monthly payment of $2,300 to $2,400 per month and that the agent said she could show them homes with that monthly payment.

Mr. Hernandez said that one month later, the real estate agent called them to let them know she found a home for $762,000 that they would like. Mrs. Hernandez told the real estate agent that the price was too high and said the real estate agent assured her not to worry, that a loan agent could give her a low payment. According to the Hernandezes, the real estate agent called back an hour later to tell them she had negotiated a lower price of $750,000 for the home.

Later that day, a loan agent called the Hernandezes to set up an appointment for the same day. They say the loan agent promised them low interest loans and they relied on these assurances. The Hernandezes say the loan agent negotiated with them in Spanish through a translator who was an employee of the loan agent, but the loan documents presented for their signature were all in English. They say that neither the loan agent nor the translator explained what was contained in the documents.

Mrs. Hernandez attempted to confirm that the payments would be approximately $2,500, in the range that the Hernandezes thought they could afford. The broker, through the translator, told them for the first time that the monthly payments would actually be $4664. The Hernandezes told the loan broker they couldn't afford the loan. The Hernandezes say that the loan broker told them not to worry that in six months she would be able to refinance their loan into an affordable fixed rate mortgage requiring a payment between $2,400 and $2,600. The Hernandezes said they relied on this assurance and continued with the purchase transaction. The Hernandezes said they were barely able to make the payments of $4,664 for the first few months but they did so with the understanding that their payments would be reduced in April or May of 2006.

In April 2006, Mr. Hernandez went back to the loan broker to get the loan refinanced as promised. Once again, they spoke with the loan broker through a translator. The Hernandezes were asked to give the loan broker their bank statements which they say showed that they had less than $500 in their bank account. They say they were never asked for their current income, but that Mrs. Hernandez volunteered that information, letting the loan agent know that their income had decreased.

A few days later, the Hernandezes were called to the loan broker's office to sign documents which were all in English. While signing the documents, the Hernandezes saw a document that looked like their total payment would be $3,600 per month, over $1,000 per month higher than what they were expecting. Mrs. Hernandez asked for an explanation but was told that the loan agent and the original translator were not available to provide the explanation, even though Mrs. Hernandez said she could hear the loan agent's voice coming from another office. The Hernandezes thought that because they had already signed a number of documents they could not back out so they continued signing while another employee of the loan broker urged them to do so, they said.

After they had signed all the documents, the Hernandezes said a notary arrived and the loan broker came into the room. They say this is when they learned that they had actually signed for three loans and that the notary was from the private lender who had given them one of the loans.

The first refinance loan was an adjustable rate mortgage loan in the amount of $596,000. This loan offered the Hernandezes an introductory payment of $1,986.18 for the first month of the loan only. Thereafter the interest rates would continue to change every month based on the current rates for the LIBOR index rate plus a margin of 2.975 rounded to the nearest 0.125%. The loan had a rate cap of 9.950 and a floor of 2.975.

The loan places a limit on the amount of unpaid principal balance that the Hernandez can carry on this loan. If their outstanding balance exceeds 115% of what they borrowed, a new higher minimum payment will be triggered. Their loan has a payment option feature which sets the minimum payment due at a sum that is lower than what would be required to pay the monthly interest due on the loan. By paying only the minimum amount required, the loan also has a negative amortization feature which means that even though the Hernandezes are making the minimum payment required, their loan balance is not reduced, and in fact continues to grow towards the 115 % trigger for higher minimum payments.

The Hernandezes say they did not understand that the principal they owed on the house would continue to increase as they made payments. To avoid this result, the Hernandezes would have to make the fully amortizing monthly payment which is the amount necessary to pay the loan off (Principal and interest) at the maturity date in substantially equal payments. In November 2008, the fully amortizing payment amount was $4,491.30, which is $2,296.02 more than the minimum monthly payment required at that time and greatly in excess of the $2,500 per month payment the Hernandez said they could afford.

From that loan, according to the loan closing statement prepared by the title and escrow company handling the refinance loan, the lender paid the loan broker a premium, known as a yield spread premium, in the amount of $17,880 for refinancing the Hernandez' mortgage.

The second loan was from another lender for $74,450 and required fixed monthly payments of $533.37 for 15 years at a rate of 7.75%. After 15 years, a balloon payment of approximately $57,000 would be due.

The third loan was from a private investor in the amount of $108,125. This was an interest only loan at 10% for two years. After two years, a balloon payment of the entire loan ($108,125) was due. The Hernandezes discovered that only approximately $85,000 of the private investor loan was credited to the refinance. The Hernandezes allege that the other approximately $23,000 was taken as up front fees by the lender.

Mr. Hernandez says there's nothing he can do to save his home. He cannot afford his payments and he can't refinance, he says, because the home's value has declined below what he owes on the loans. His lawyer said Mr. Hernandez tried to get a loan modification but his lender refused because Mr. Hernandez had not missed a payment. He says his only option is to lose the house and remarked, "This is the first and I think will be the last home I ever own."

Carl Lee

"It wasn't the end of the world, but it felt like it." —Carl Lee

Watch Video »

Carl Lee of Westchester, Illinois is 42 years old and lost his home to foreclosure in 2006. He now lives in a home he rents with his wife and young daughter. When Mr. Lee purchased his first home in 2002 it was the fulfillment of a life-long dream to finally become a homeowner. Mr. Lee thought that the loan he was sold was a fixed rate mortgage and that his monthly payments would be the same for the life of the loan. He was surprised when he realized he had received an adjustable rate loan and that his initial payment would go up, and continue to rise in the future.

The loan payments soon became unaffordable and Mr. Lee fell behind. When he was two months behind, Mr. Lee said he began working with a potential lender who promised him lower payments. By the time the new lender had the loan refinance documents ready for the Lees to sign, they were four months behind on their mortgage payments. Mr. Lee said when he saw the new payments that would be required by the new refinance loan, he knew he could not afford them and notified the lender. Then, Mr. Lee said, the new lender assured him that he would make the loan affordable by giving the Lees a second "piggy-back" mortgage loan, (in addition to the new first mortgage loan). The second "piggy-back" loan was supposed to give the Lees an additional source of cash with which to pay their new refinance loan.

Feeling the pressure of being four months behind on his mortgage, Mr. Lee said he felt he had no choice but to accept this arrangement. Mr. Lee said the piggy-back loan never came, his wife lost her job and he immediately found himself struggling to make the payments on the new loan. The Lees relied on the help of family and friends to make some of their payments. After unsuccessfully trying to negotiate with the lender for more affordable terms, the Lees could no longer make their payments and their home was sold in foreclosure.

Langdon McAlpin

"I got the feeling I was just a number. They've hurt a lot of people, we're just one of them." —Langdon McAlpin

Watch Video »

Langdon McAlpin, a disabled police officer from Loganville, Georgia, is 67 years old. The lender who now holds his loan has declined Mr. McAlpin's offer to pay off the loan with a new reverse mortgage. As of January 30, 2009, Mr. McAlpin is on the verge of losing his home of 19 years to foreclosure.

Mr. McAlpin had been a city of Decatur police officer for 23 years when he was struck by a vehicle while directing traffic in 1989. He suffered severe physical injuries including a significant head injury and is permanently disabled from work as a result. In 2004, the McAlpins refinanced and were sold an adjustable rate mortgage (ARM) that they could not afford. Mr. McAlpin said the lender told them they were qualified for the loan, but in fact that was not true. The ARM they received had a fixed initial interest rate for the first two years that continued to change every six months thereafter. His income, on the other hand, was limited and fixed and Mrs. McAlpin was unemployed. The only household income came from Mr. McAlpin's pension disability check in the amount of $2,039.62. After a deduction of $250 for Mr. McAlpin's medical insurance, the McAlpins had $1,789.62 net monthly income available to pay the new mortgage payments and their other household expenses.

After the loan was made, the McAlpin's initial monthly principal and interest payments on the new mortgage were $888.71. After the city and county property taxes and homeowners insurance were escrowed into the payment ($221.91 per month), the total monthly housing payments for the McAlpins were $1,110.62. The initial mortgage payment consumed a staggering 62.06% of the McAlpin's net monthly income and the McAlpins struggled to make the payments. Two years later, the interest rate adjusted and the escrow payments increased inflating their monthly mortgage payments to $1,378.52. Six months, later their monthly mortgage payments rose again to $1,487.92. Six months later, on July 1, 2007 the total mortgage payment effective on August 1, 2007 was $1,576.46, or over 88% of the McAlpin's net monthly income.

On October 26, 2007, the Georgia Department of Banking and Finance revoked the mortgage lending license of the original lender involved in the McAlpin mortgage loan and entered into a consent order with its owners to resolve allegations pertaining to violations of the Georgia Residential Mortgage Act and agency rules. However, the McAlpin loan has been transferred and assigned to another lender who is not subject to the Georgia Department of Banking and Finance action against the original lender. Through his lawyer, Mr. McAlpin is alleging that the purchaser of the loan knew or should have known of the legal claims against the original lender and should have more closely inspected the documents in the loan files it purchased. Had it done so, the McAlpin's allege, it would have discovered that that this was a clearly unaffordable loan.

Argy Tripodis

"They've told us we can either walk away, we can look at foreclosure. That's not a nice choice." —Argy Tripodis

Watch Video »

Argy Tripodis of Hobart, Indiana is 42 years old and is in danger of losing the home she has shared with her family of five since 2002.

Mrs. Tripodis works full-time and is the mother of three children. Her husband, Yiannis, also works full-time to support the family. The Tripodis family purchased their home in a Hobart subdivision with the dream of spending many years there and investing their hard earned mortgage payments in growing the home's equity. Mr. and Mrs. Tripodis purchased their home with an adjustable rate mortgage (ARM) which adjusted frequently and required increasingly more expensive mortgage payments. After the Tripodis' youngest child was born two years ago, Mrs. Tripodis' income declined because she was caring for her baby. When she returned to work, a significant portion of her paycheck went to pay for childcare for her youngest child.

In order to try to stabilize the escalating mortgage payments, Mr. and Mrs. Tripodis tried to refinance their mortgage but were unsuccessful. They then filed bankruptcy but were surprised to learn that the bankruptcy did not keep their mortgage payments from going up even though their other debts were managed through the bankruptcy proceeding which was discharged in Bankruptcy Court in April 2007 after the Tripodises completed their Chapter 13 plan.

In November 2006 the Tripodises refinanced into another mortgage, but the payments are still unaffordable and consume over 40% of their take home income. They feel that they are caught in a bind. They cannot afford their payments, nor can they afford to sell because in the current real estate market their home value has declined. The Tripodises believe that refinancing would be the best way to get a lower mortgage payment they could afford so that they can stay in their home. But because they will have to pay an $11,000 prepayment penalty if they refinance their mortgage before November 21, 2009, refinancing may not be an option.

Mrs. Tripodis has been trying for a year to convince her lender to reduce or eliminate the prepayment penalty on their mortgage so that they can afford to refinance, but the lender has been unwilling to do so. In the hardship letter she sent to her lender, she told the lender that she and her husband are having difficulty making the monthly mortgage payments and meeting their other expenses, including medical bills, because her husband's pay, which is based mostly on tips, has declined. She has complained to the Illinois Attorney General about the lender's prepayment penalty policy but this has not had an impact.

Besides their paychecks, the Tripodises receive a limited amount of help from Mr. Tripodis' mother and sometimes have to borrow money from other relatives. Even so, they are living paycheck to paycheck and often run out of food in between pay periods.

George Chandy of Leesburg, VA

"If I knew there was no balance, I would not have used my debit card" —George

Since the beginning of 2008, George has been incurring $35 overdraft fees for debit card purchases that are usually transactions worth less than $10. In July, he was charged a $35 overdraft fee on a small fries for $2.15 at McDonald’s, for which he explains, “If I knew there was no balance, I would not have used my debit card.” George receives his paychecks through a direct deposit into his checking account, and during these periods between paychecks George usually overdrafts at least once.

George would prefer to cancel the overdraft program on his debit card and would certainly rather be denied at retailers for charges that would cause overdrafts, but he chooses not to opt-out because his bank would then terminate the overdraft program on his checks and automatic bill payments. While he thinks that overdraft protection is important to make sure that his mortgage and other payments are processed, he still struggles regularly with the $35 overdraft fees that are being charged for small overdrafts from his debit card. If he was allowed to choose which aspects he could apply overdraft protection to upon enrollment, George would not be facing these troubles.

Justin of Crestone, CO

" [the representative] said his hands were tied because the bank rules were the bank rules…" —Justin

Because Justin’s business accepts credit cards, he is required to keep a merchant account connected to his Chase business account. This merchant feature accepts the full amount of a customer’s payment and deposits the credit into the business account, and then automatically deducts a fee for the use of the merchant account.

In October 2008 Justin’s credit card deducted $250 from his checking account as part of his monthly auto-pay – he was unaware that he had less than $250 in his account at the time. Justin was charged a $35 fee for being overdrawn. Justin then used his business debit card to make a $400 purchase causing another unintentional overdraft – he assumed that if there was not enough money in the account to cover the transaction it would be denied. Within three days, Justin had also accepted a credit card payment from a customer for $150, and when the merchant account deducted its $4.48 usage fee, Justin incurred another $35 overdraft fee. Because Justin did not realize that his account was overdrawn, he was charged an extra $27.50 fee for each of the two overdrafts that were left unresolved.

With $160 total overdraft fees in just three days, Justin contacted his bank representative. Justin recalls, “[the representative] said his hands were tied because the bank rules were the bank rules – when I told him that I don’t want overdrafts, and that if I have insufficient funds my charges should be denied, he told me that he could not turn off my overdraft service.” Eventually, half of Justin’s overdraft fees were reversed – but he explains, “With my business, it takes at least $150 to make a $70 profit.” Although he was able to reduce his overdraft charges, Justin attributes his experience to Chase’s “bad policy.”

Dorothy of Oregon

In December 2007, Dorothy purchased a $50 gift card from Blackpoint Inn Restaurant as a Christmas gift for her daughter. Dorothy’s son also purchased a $50 gift card from this restaurant at around the same time to complement Dorothy’s gift to her daughter. Unbeknownst to them, the restaurant was one of the many owned by a restaurateur who on numerous occasions opened businesses on borrowed funds and then claimed bankruptcy. In January 2008, when Dorothy’s daughter had intended to use both of the gift cards, the restaurant had already been shut down and was long gone. There was no way for Dorothy’s daughter to redeem the $100 value that was rightfully due.

Asher of California

In 2006, Asher used his Citibank credit card reward points (which were charged to his credit card) to purchase a $100 Starbucks gift card through The Gift Assistant. Given that The Gift Assistant was a recommended third-party vendor, Asher assumed that he was ordering from a legitimate company. Months later, Asher received an e-mail from the vendor apologizing for the delay: “…we encountered an unexpected event that had a major negative impact on our company and as a result, on our customers. We have fallen behind in our fulfillment of your gift card orders and redemptions.” The e-mail did not offer any solutions, but only weakly stated “be assured that all gift card orders and redemption requests will be taken care of in their entirety as soon as possible.” Asher replied to this e-mail and requested that the full amount of his gift card be refunded to him with added interest. Five months later, Asher sent a follow-up e-mail as he still had not been compensated, and never received a response. Within these five months, Asher has also called the company on numerous occasions to no avail. Since the last he heard from the company, Asher and his wife have had two children, and he does not have the time to chase after this bankrupted vendor. Asher plans to contact Citibank when he has time, but for now remains disgruntled and robbed of his $100.

Thomas of Raleigh, NC

Tom received a $25 All Access Visa gift card as a Christmas present in December 2007. He held onto it until December 2008, when he attempted to purchase an item costing less than $25 and the card was rejected. Upon visiting the Visa gift card website, Tom discovered that the user agreement had changed. Initially, the agreement stated that after 12 months Visa would deduct $2.95 per month; however, at the time that he attempted to use the card, the new agreement stated that Visa would deduct a $4.95 monthly fee beginning after the sixth month. Knowing that his purchase was within the 12 month time period, he contacted the bank that issued the card over the phone, twice – to no avail. Finally, after finding a copy of the original user agreement on the web, Tom was able to get a response. Only after he had forwarded this document to the bank was his problem addressed, and Tom was finally compensated.

Jackie of California

For Christmas 2006, Jackie and her husband bought their daughter a $75 gift card from Tower Records. Less than a year later, upon learning of the company’s bankruptcy filing, Jackie attempted to verify the value of her daughter’s gift card but was unable to do so. Because there were no longer any Tower Records locations open in her area, she started by calling the contact number on the back of the gift card, which was of no help. Jackie then e-mailed Customer Care, and was instructed by a representative to contact the financial institution that had issued the card. Knowing that the gift card was purchased at Tower Records and did not involve any third parties, Jackie responded stating so. She then received a generic e-mail message explaining that the company assets had been transferred and that the new company would no longer accept gift cards. This message included instructions for filing a claim with the bankruptcy court. Jackie e-mailed once more to inquire about the value of the card in order to file the claim, and again no information was provided. Jackie, in the end, was still unable to verify the value of her gift card. Because she is familiar with bankruptcy court procedures, Jackie ultimately chose not to waste any more of her time.

Joan of Maryland

About two years ago, Joan redeemed her Discover Card rebate credit for a pair of Sharper Image gift cards which totaled $120 in value. Around the time when Sharper Image first filed for bankruptcy, Joan attempted to use her gift cards on the company website but was unable to do so. Joan prefers to shop online because she is disabled, making it very difficult for her to visit malls or shopping areas. On later occasions, Joan returned to the website and found that she was still unable to use her gift cards. The website repeatedly stated that gift card holders should check back at a later date for more information. As she battles health issues and is currently dealing with other legal matters, Joan cannot find the time to chase after the $120 she knows that she is entitled to.

Donna of Ocala, FL

"When you get older, [credit card companies] try to take advantage of you" —Donna

Donna has always made a point of keeping a watchful eye on her credit card statements but was shocked when she received a “finance charge” on a zero balance account with Capital One. With the economy in a recession, she decided to get rid of some debt, and in February 2009 she paid the entire balance off. When she received her March statement, she expected to see a zero balance, but instead she saw a “finance charge” totaling $2.02 due for March.

She attempted to email Capital One, but was told that sending her financial information over the internet was not safe for purposes other than checking her balance online, so she called and spoke to a customer service representative. Finding it difficult to get the finance charge removed or any answers from anyone at Capital One regarding the reason for the finance charge, Donna decided to pay the charge of $2.02, cut up the card, and never use the card again. She then directed Capital One to close the account. While recently checking her credit report though, she saw that the account was still not closed, and reports her account as “Open, never late.”

The situation clearly angers her, but she tries to find humor in the situation. Aware of the Capital One slogan, “What’s in your wallet?” Donna sarcastically stated, “Guess what’s not in my wallet?” She is angry with Capital One and believes that they are trying to make a quick buck on her. She explains, “When you get older, they try to take advantage of you.”

Donna is upset with her credit card company and wants to see an end to hidden fees and other unsavory credit card practices. She has written to her local Congressperson, and hopes that Congress speeds up the enactment of new credit card protections for consumers.

Cyndi of Cottage Grove, MN

"They committed to one thing, and are now doing another!" —Cyndi

“They committed to one thing, and are now doing another!” Cyndi, a single mother from Cottage Grove, Minnesota describes the never-ending saga that she has endured with credit card company Capital One.

In February, Capital One notified Cyndi that it would be raising her interest rate from 7.99% to 21.65% plus the prime rate on her $7000 balance (even though she’d always paid at least the minimum payment and always paid on time). Outraged, Cyndi called her credit card company and was told that it was a “business decision” and that six other credit card companies were doing the same.

Cyndi explains “I’ve worked hard for everything I own.” Her mother worked in a meat packing plant, and instilled a strong work ethic in Cyndi, who began work at the tender age of 15 out of necessity. She believes that Capital One’s executives are out of touch with Middle America. “In these times, we have been cutting back everywhere we can.” Cyndi is not sure that credit card companies are doing the same as they’ve responded to bad economic times by raising rates and fees, not by adding any value or by becoming more innovative. The increase in interest rates for even its best customers baffles her.

The incident has pushed her over the edge as she explains that she does not trust credit card companies anymore. “I am not spending anymore. Now I’m just paying as aggressively as I can.” Cyndi eventually used her tax refund to completely pay off her balance and hopes to be credit free in two years.

But when she received her last and final bill from Capital One, she was shocked to see a finance charge of $25 on her bill which was calculated from the previous month’s balance. She hadn’t recalled ever seeing such a fee on her bill before, but additional hidden fees are what she now comes to expect from Capital One.

Cyndi explains that, “without customers there are no companies.” She hopes that Capital One understands this straightforward logic and that Congress will act now to correct these practices.

J.B. of Austin, TX

The arbitrary nature with which credit card companies increase interest rates on customers is demonstrated in the case of J.B. from Austin, Texas. He has been a responsible cardholder for over thirty years, has almost always paid his credit card bill on time, and typically doesn’t even carry a balance because he often pays it off in full. But earlier this year his credit card company notified him that his interest rate would more than triple for new purchases and balance transfers starting in 2010. His current rate is 5.9 percent, and they are raising it to 14.65 percent plus prime (around 17.9 percent). Before contacting his credit card company, J.B reflected on his credit card history and finances for a while, searching for a possible explanation for the rate increase. The best answer he came up with was a late payment on his daughter’s card four years ago on a linked account and maybe one other late payment several years back. But the sudden rate increase didn’t make any sense because he has a stellar credit score, and is a very low credit risk.

When he called his credit card company, he was told that it was sending “change in terms notices to over 20 million account holders”. A customer service representative flippantly told him that “other companies are doing this too.” But the credit card company was unable to provide him with any explanation for why his account was being singled out for a rate increase.

With this new information, J.B. decided to contact the OCC to make a complaint about this practice. He ended up receiving a letter from the credit card company shortly thereafter, but it was filled with the same boilerplate language that was in the original notice he’d already received.

In the end, J.B.’s story will probably end more favorably than many others who have received the recent “Change in Terms” notices the credit card companies have been circulating—he will pay off the balance on his card and he plans to never use the card again. But J.B. is still upset that the credit card companies are trying to take advantage of those who have managed their finances well while the credit card companies have not done the same. The lack of proper due diligence and underwriting in the industry baffles him, and he hopes that action will be taken to correct these practices.

Morris of Media, PA

"…I was fearful that they would cut my credit limits even more if I called again to complain." —Morris

Morris, a 57-year-old Financial Planner from Media, Pennsylvania, was left with few options when American Express significantly lowered three of his credit limits. He’d used his credit cards—once totaling $70,000 of available credit—to run his small financial planning business.

But last December, as he began to pay down the balances on his three credit cards, American Express lowered his credit limits to just above his credit card balances. His three American Express cards had previous credit limits of $40,000, $22,000, and $8,000 and were paid down to balances of about $27,000, $1000, and $3000, respectively. As Morris worked to pay down his debt, he was notified that his new credit limits would be reduced to $27,500, $1200, and $3100—leaving him with just about $800 of available credit.

The effect was devastating. Morris, who used his credit cards monthly to pay for desperately needed business expenses like online web support, marketing costs, furniture, business certifications and licenses, and to pay for his health care was no longer able to do so; his financial situation spiraled downwards overnight.

When he contacted American Express, he was told that credit limits are sometimes reduced when a customer’s credit utilization rate increases or if their credit score drops. Additionally, he was told that he was not paying down his balance quickly enough. These answers were not satisfactory though because he’d always paid at least the minimum payment and had a high credit score. The increase in his utilization rate was, in large part, caused by the 55% reduction in his American Express credit limit. To make matters worse, when Morris checked his email later that night, there was a letter from American Express stating that it had further reduced the limit on one of his cards.

Morris believes that the latest reduction in his credit limit was made specifically because he registered a complaint. When asked whether or not he took further action with American Express when this occurred, he explained that “I know I shouldn’t be scared, but I was fearful that they would cut my credit limits even more if I called again to complain. So I took no further action with them.”

Instead, Morris wrote a letter to his local representative in Pennsylvania, Joe Sestak. He hopes to have his credit limits reinstated to their previous levels, but he also wants Congress to take further action to protect Americans who, through no fault of their own, have the original terms of agreement changed unexpectedly.

Thomas of Indianapolis, IN

"People are getting punished for doing the right thing!" —Thomas

Thomas, a recent college graduate from Indianapolis, Indiana, was outraged when the interest rate on his MBNA credit card suddenly skyrocketed from 4% to 24% following the merger of MBNA with Bank of America (B of A) in 2006.

Upset about the rate increase, Thomas wrote to B of A and called in to their customer service department. He’d been a loyal cardholder since 1998 who’d always paid his bill on time and always paid more than the minimum amount due. Thomas often even made up to three payments per billing cycle in an effort to quickly pay off his B of A credit card. When he asked B of A for answers, they told him that it was a new “policy decision”. Thomas says that he would have felt much better if he were told that the interest rate increase was caused by something that he did. He believes that, “People are getting punished for doing the right thing!” He adds, “I really think they just wanted me to stop using my credit card because they were not collecting enough interest from me, and they just got greedy.”

He explained that he was only able to pay off his now high interest credit card debt through inheritance money he had received. Discussing the matter 3 years later still makes him uncomfortable. He knows that millions of Americans are not able to escape from similar credit card debt that is brought about by abusive credit card practices.

Thomas has sent letters to two of his representatives from Indiana—Sen. Evan Bayh and Rep. André Carson—detailing his story. He is fed up with credit card company tricks and hopes that Congress will act now to crack down on such abusive practices.

Brad of Tucson, AZ

"29% [interest] is like mafia rates – loan sharking is what they’re doing" —Brad

Brad is a small business owner in Tucson, Arizona who has recently been relying on his credit cards to keep his businesses afloat. After fifteen years of perfect credit history, he is now having trouble with two of his credit card companies. In 2008 he paid a Chase bill three hours late, which caused his interest rate to jump from 4.99% to 28.99%. As a result of this late payment, the interest rate on his Countrywide (Visa/Mastercard) also went up to 28.99%. When he contacted Chase to get his rate adjusted, he was directed to the Hardship Department discovered that he didn’t qualify because he was a self-employed business owner, and was told plainly: “That will disqualify you right there – because you are able to make the payments”.

When Brad contacted Countrywide, he was told by a representative that after one year of perfect payments his interest rate would be reevaluated. A year of timely payments has come and gone, and this bank is still unwilling to renegotiate his interest rate.

Also, in January of 2008, Chase notified Brad that his credit limit would be lowered to $500 above his current balance. His original credit limit of $22,000 became $19,000, and is now only $16,000. In addition to this, Brad’s credit card company charges a $15 fee for making payments over the telephone. With such high interest rates applying to his new charges as well as his old balances, and strict limitations on credit, Brad finds it impossible to keep up with paying off his balances and is now looking into debt consolidation options.

Dot of Pickens, SC

"a few days before bills are due, [Exxon’s] bill-paying option goes down – no access, out of service." —Dot

Dot works three jobs and she still manages to keep track of her credit card bills, although Exxon makes it quite difficult for her to pay them. She explains: “a few days before bills are due, [Exxon’s] bill-paying option goes down – no access, out of service.” Usually when this happens, Dot calls in to customer service and explains the situation so that she can make her payment over the phone.

In January of 2009, Dot’s Exxon credit card due date fell on the 11th instead of the usual 13th or 14th of the month when she was expecting it. That weekend, Dot had to travel out of town for a funeral. A few days prior, Dot had attempted to pay her bill online and again was unable to because the website was not in service. She explains: “I tried daily to pay that bill online for several days, attempting the last time at about 2:30 a.m. on the morning of that strange, early, Sunday, Jan. 11 due-date. The site was still down. I had to leave early that morning and could not try again until about 6 p.m. -- when I found the site up and working fine -- and then was told that the cut-off time was 5 p.m. and I would have to fill in the payment date as the next day, Jan. 12.” Dot was frustrated: “Having us fill in the next day’s date, it’s a lie, not the truth – we’re still paying on the 11th even if it’s after [Exxon’s] due hour.”

The very next morning, Dot called Exxon customer service and made it clear that she was very upset about being penalized when online payment services were unavailable. Eventually, after expressing her frustration, she was told by the representative that her $39 late fee and the 6% rate increase would be reversed by her next billing cycle. On her next bill, Dot was not surprised to find that both penalties were still included, and so she called Exxon again. This time, she was promised once again that the rate increase and late fee would be removed. Finally, when Dot received her next bill, both penalties were gone.

In March 2009, Dot’s interest rate went up to 23.31% from the 21% rate that had been restored. As she has not made any late payments after the incident in January, Dot is incredibly frustrated: “[The banks] will get one over on us every way they can.”

Pete of Alpharetta, GA

"People are struggling to find new jobs, or hold other financial issues together, and then they open their mail and find out for one late payment, their interest rate triples" —Pete

Pete and his wife are longtime customers of Bank of America and Citibank, and were surprised when their interest rates were arbitrarily increased around Christmas 2008. Pete’s Bank of America Mastercard, which had been at 5.9% APR for ten years, was now raised to 15.8% while his wife’s Citibank Amex business account went from 7.9% interest to 14%. Neither of them had ever missed or been late on any payments with these cards, and both have maintained a FICO score in the mid-700s. The only reason for the rate increases given by both Citibank and Bank of America was that “the economy has changed and this [is] the cost of doing business.”

During his conversations with bank representatives, Pete was not able to recoup his original interest rates. While requesting to opt-out of his Mastercard account, he was told by the representative that they could not provide a confirmation number for the cancellation. Six phone calls later, Pete was finally able to get a letter from the company proving that he had chosen to opt-out. Although Pete had told one of the representatives that he had already shredded the card and would never use it again, he was informed that if any additional charges were made on the card, the rate on his existing balance would jump to 15.8% - even though he had already opted out. Realizing that this could be triggered by reoccurring payments set up even more than a year ago, Pete requested that the representative look through his account to find existing auto-payments in his history. She was only willing to review the past three months. Pete explains, “I’m not using the card anymore, and I don’t want them to allow an automatic renewal.” Finally, he had the account closed altogether.

Also in 2008, the credit limit on Pete’s American Express went from unlimited to $17,000 for no reason. In the previous year, Pete had spent over $50,000 on this card alone, yet he was still not able to recover anymore of his available credit with the bank.

Later, in March 2009, Pete made one late payment on a Sear’s Mastercard. The penalty for his first offense was an interest rate increase from 12% to 37%, and when he called the bank he was not able to get this reversed or lowered. In his conversation with this representative, Pete was told, “Your credit score and payment history don’t really matter, what matters is that you were late on this payment.” Pete has decided not to use this card again: “I said fine, I will never buy another product from Sears.”

Pete and his wife are beyond frustrated with the recent troubles they’ve faced with the banks: “People are struggling to find new jobs, or hold other financial issues together, and then they open their mail and find out for one late payment, their interest rate triples – just because the banks made bad business decisions, they shouldn’t put [their debts] on the back of the people of America.” Pete filed a complaint about his recent credit card experience with the OCC and is waiting for a response. He’s decided that he will never do business with these companies again.

James of Minneapolis, Minnesota

"In the nasty wonderland of American banking, your credit rating is reduced for canceling a card account." —James

James knows the banking and credit card industries like the back of his hand. At 73 years old, the retired business and economics journalist from Minneapolis, Minnesota, spent more than 30 years covering the industries. But he was perplexed as to why U.S. Bank raised his credit card interest rate from 7.99% to 20.99% with no forewarning; he’d been a cardholder for close to 20 years, often paid much more than the minimum amount due and had an excellent credit score.

James had just paid off half of his balance in March when U.S. Bank notified him that his interest rate would nearly triple in April. Was this the reward for paying down his debt and being a loyal customer, he wondered.

James contacted U.S. Bank to demand an answer and initially was given the runaround, receiving no explanation for the rate increase. He was later notified that the increase was a penalty incurred as a result of two late payments and exceeding his credit limit. The “late payments” were possibly, according to James, two days late—a consequence of being mailed and postmarked before the due date but not processed by the due date—and the over-limit occurrence for an automatic payment, even though review of his last 15 billing statements shows that he was nowhere near his credit limit.

Although James disputes the veracity of U.S. Bank’s claims, he explains that “fighting it can often cost you more than just living with it.” Instead, he will soon pay off the U.S. Bank credit card in full, with the intention of never again using the card. Though James would prefer to close the account altogether, he is well versed enough to know that “in the nasty wonderland of American banking, your credit rating is reduced for canceling a card account.”

While James is able to successfully curtail some of the negative effects of U.S. Bank’s increased rate by paying off his card and never using it again, he knows that many other cardholders are not. Though cautious in hoping that anything can or will be done, James is steadfast in the belief that some action must be taken to overhaul the credit card and banking industries for the sake of the millions around the world who fall prey to their practices.

William of Stuart, FL

"[Amex] created the situation by which they ‘justify’ this [rate] increase –that’s fraud in most legal systems. Why are we not able to prosecute?" —William

Bill has been a cardholder with American Express for more than 30 years, and has a perfect payment history as well as a credit score of 760. In September 2008, Amex reduced Bill’s credit limit from $25,000 to $14,000 for no reason. Then, in November 2008, Bill received notice that his interest rate was increasing from 7.9% to 19.9%. When he contacted Amex, he was told that his “balance was high in relation to his available credit.” Before the reduced credit limit, Bill was only using 50% of his available credit, but after Amex lowered his credit limit to just above his balance, it appeared that he was now using 95% of his available credit.

After Bill was unable to get his interest rate restored over the telephone, he wrote letters to the Chairman of the Board, and the Vice President of Consumer Relations. By the time he received a response from Amex to reinstate his original interest rate, Bill had already closed his Amex account. Bill explains: “A long time great customer should not be required to go to that extent in order to correct an obvious blunder.” Also, because Amex had cut his credit limit in half and negatively affected his credit score, Bill’s Bank of America Visa card raised his interest rate from 9.9% to 19.9% in early 2009. Bill also closed this account.

Bill’s wife has a business account with Advanta, and in June 2008 was appalled when her interest rate went from 9.9% to 31%. When she called Advanta, she was told that the company had mailed letters to their consumers in June and that she had the option to opt-out at that time. Even though she had never received the letter, Advanta was unwilling to restore her interest rate. Bill’s wife responds: “Why would any sane person accept such an extraordinary rate hike if they had actually been given the option to keep their original rate?” When she faxed 40 pages of complaints from other Advanta customers who had not received the rate increase notification, she received a call back from the CEO’s office promising to restore her original rate.

Months later, in December of 2008, the 31.9% interest rate was still on the monthly bill. Every time she received a statement since the promised interest rate adjustment, she called in to customer service and was told that the rate “just hadn’t been updated yet,” and was told to wait. She continued to pay the high interest until she sent a certified letter with all associated documents asking a supervisor in accounting call her. She also sent Advanta a $100 check as payment. Although Advanta received her letter and check, they did not respond and did not cash the check. The account was immediately turned over to collections. Two more certified letters and many phone calls later, Bill and his wife are still not able to get help from Advanta. With no other options, Bill and his wife have enlisted the help of an attorney and are now pursuing legal action.

Bob of Colorado Springs, CO

"Its one thing to punish the people who don’t pay their bills, but to fool around with the consumers who pay on time and are good customers – none of us should have to deal with that." —Bob

Bob and his wife hold three Bank of America credit cards between the two of them, and have maintained low interest rates of 7.99% for several years. With high credit scores and perfect payment histories, Bob and his wife were alarmed when they received notices about all three interest rates increasing to 15.74% on two cards, and 12.99% on the other. Bob’s credit limit on one of these cards was also reduced drastically from $5000 to $500 in early 2009.

When Bob called Bank of America, the representative he spoke with cited his lack of use on one of the cards among other reasons which Bob describes as, “nothing good and nothing legitimate.” After multiple conversations with the bank, Bob was not able to get his interest rates or credit limit restored. Bob explains, “Its one thing to punish the people who don’t pay their bills, but to fool around with the consumers who pay on time and are good customers – none of us should have to deal with that.” If Bob and his wife cannot recoup their original credit card rates and credit limit back, they plan to look into more reasonable rates through credit unions and other credit cards.

Scott of Rochester, NY

"Virtually every bank has jacked up our rates to ridiculous levels, as well as increasing our minimum payment. If something doesn’t change quickly, we will have no choice but to declare bankruptcy or go on a debt reduction plan." —Scott

Scott and his wife maintain good credit scores, and they haven’t paid any of their credit cards late in the last ten years. With 10 credit cards between them, Scott and his wife ran into trouble when the interest rates on seven of these cards were suddenly increased. Scott began to receive notices in October 2008 – his Citibank Visa went from 12.2% to 19.99%, while his Bank of America Mastercard increased his interest rate from 7.9% to 15%. Scott’s HSBC credit card was closed entirely, and five of his 10 credit cards reduced the credit available to just above the balance owed.

Scott contacted the companies which increased his interest rates, and was told that his credit ratio made him a risk. When contacting the companies which lowered his credit limit, he was told that he had not been using his card often enough and that his available limit had been lowered to a more appropriate number. After failed negotiations to restore his interest rates, Scott was forced to close some of these accounts to lock in the original rates. Scott and his wife like to keep credit readily available for emergency situations and have been making good progress at reducing their debt until recently.

Now that their rates have increased for no reason, Scott and his wife are running out of options: “We are stretched to the limit. Virtually every bank has jacked up our rates to ridiculous levels, as well as increasing our minimum payment. If something doesn’t change quickly, we will have no choice but to declare bankruptcy or go on a debt reduction plan.”

John of Oakland, CA

"No longer can we trust corporate powers to police and restrain themselves." —John

John was flabbergasted when his credit card company, JP Morgan Chase, arbitrarily added a $10 monthly “service charge” to his account and increased his minimum monthly payment from $167 to $411. Alternatively, Chase informed him that he could avoid the service charge and higher monthly payment if he would agree to an increased interest rate—from 3.99% to 7.99%. Rather than accept the changes, the university professor studied up and fought back with a vengeance.

Like other credit card issuers, Chase has been sending out many “Change in Terms” notices to its customers, many of whom, like John, pay at least the minimum amount due—always on time—and have excellent credit scores. Why then, John wondered, was he penalized for managing his debt responsibly? He believes the changes serve to make up for lost profits in tough economic times, with the bank seeking to generate income from its less lucrative accounts. Through his research, John concluded that Chase was successful at forcing many of its customers to accept a two-fold increase on their fixed interest rate because people could not afford to pay the increased minimum payment. This was taking place, even though Chase aggressively promoted their credit card with a guaranteed lifetime rate of 3.99%. The bank maintains that while unfavorable, the changes are necessary to “offer the best value to our Cardmembers.” Regardless of the rationale, John used only one word to describe how Chase’s behavior has made him feel—bullied.

But John refused to let Chase push him around without a fight: he pestered its customer service representatives with letters and phone calls; wrote to a member of Chase’s Board of Directors, the Office of Comptroller of the Currency, and his local congressperson; and contacted his local news station, hoping to ultimately restore his original terms of agreement.

John has now shifted his focus to another arena, joining a class action suit against Chase. The suit argues that, by imposing the monthly service charge and increasing their monthly payment as the only option to an increase in the guaranteed fixed interest rates, Chase violated the terms of agreements it made with its cardholders. Though the battle between credit card companies and their loyal customers rages on indefinitely, John knows one thing for certain: “No longer can we trust corporate powers to police and restrain themselves.”

Brian of Gardnerville, NV

"As someone who pays every bill and my mortgage on time every month, I have been unjustly penalized." —Brian

Over the past seven years, by paying his creditors on time all of the time and monitoring his spending, Brian had successfully increased his credit score from the low 600’s to a recent 705.

In March 2008, Amex dropped Brian’s credit limit from $8400 to $6000, and then finally to $4300 in February 2009. This most recent reduction brought Brian’s credit limit to $650 below his outstanding balance and although he was not charged any over limit fees, his credit score was negatively affected. After calling Amex numerous times and speaking with various departments, Brian describes: “I get stonewalled at every corner. [The representatives] repeat that they responded to negative information in my [credit] reports.” To the contrary – Brian receives credit report and FICO score updates monthly, and explains, “I fail to see the negative information they allude to and I assume that they’re reading from a script. I have even suggested they pull the report they are referencing and we go through the report line by line. No takers on that challenge.”

When Brian realized that his Amex credit limit had been lowered to less than his balance, he paid it down accordingly. Brian had cash available for the purchases he had made on the card at the time, but had chosen to use credit to take advantage of Amex’s offer to double manufacturer warranties. Had he known that his credit limit would be abruptly reduced and credit score dinged, Brian would have used different forms of payment.

He was notified one month later by Bank of America that his interest rate on another credit card was increasing 4% because of his recently decreased credit score and the over-limit account on his credit report. Now that his hard-earned FICO score has been reduced 35 points through no fault of his own, Brian is incredibly frustrated: “as someone who pays every bill and my mortgage on time every month, I have been unjustly penalized.”

Barrie of Friendswood, TX

"I have never received such heartless treatment in my life." —Barrie

Hurricane Ike was just the beginning of the disaster that resulted when Barrie, a 46-year-old from Friendswood, Texas, fell behind on her credit card bills. Harassing calls from credit card company American Express ultimately forced her to liquidate her retirement fund to pay off her credit card debt.

Barrie’s troubles began in September 2008 when Hurricane Ike forced her family to evacuate their home. Unanticipated expenses like hotel, food and gas costs piled up as the evacuation lasted for more than a week. Her out-of-pocket expenses were not covered by FEMA assistance, so she used the little cash that she had to get by.
When she returned home, she did her best to catch up with her financial obligations but found it difficult to make the minimum payments on her credit cards. Before Hurricane Ike, she had an excellent credit score, always paid her bills on time and always paid at least the minimum amount due. She immediately contacted all of her credit card companies to explain her recent financial difficulties, brought upon by Hurricane Ike. Several of the companies worked out payment arrangements with her, but American Express was unwilling to do so. Barrie was surprised that they were not more accommodating given her stellar payment history—of close to 10 years with them—and her excellent credit score. She explains, “I have never received such heartless treatment in my life.” Barrie continued to make monthly payments, although below the minimum amount due, while she continued to do her best to work out an arrangement with them.

The tipping point came when a representative from collections agency Nationwide Credit, Inc. called her husband at work to demand payment on behalf of American Express. In January 2009, with few options left, Barrie cashed out all $23,000 of her retirement savings to pay the credit card debt and to stop the embarrassing and harassing calls.

But by this time her account had been assessed late fees and interest totaling about $600. In light of the huge sum that would be paid, the financial hardship endured, and the stress put on her family, she believed the additional fees were cruel. Her credit score had been tarnished and her savings and retirement fund had been wiped out. Desperate to find a solution, Barrie contacted American Express to request that they remove or reduce the fees. She explains, “I don’t usually beg anyone, but I begged them to do this.” Instead, American Express only offered to replace her American Express Green Card with an American Express Optima card (the Optima card generally charges higher interest rates).

Barrie wants Congress to do something to prevent credit card companies from capitalizing on unforeseen circumstances but has lost faith that something will be done. She explains: “Everyone seems to be pointing fingers at someone else.” She has taken action to bring about credit card reform by contacting five members of Congress from Texas, the Governor of Texas’ office, the Obama Administration, and several media outlets. She explains that, “I’m not a rebel or a protester. I just want the right thing to be done. I want someone to listen to our voices”

Jean of Memphis, TN

"The little people are being taken right and left" —Jean

Jean is an accountant who stays on top of her finances, but that didn’t protect her from unfair credit card interest rate hikes. In her mind, “the little people are being taken right and left” and she wants something to be done about it.

Jean’s credit card story is similar to many others across the country in that her troubles began as a medical problem. Jean experienced heart failure after routine surgery to have her tonsils removed and ended up spending four days in the hospital’s intensive care unit. As a result, she ended up paying her bill a couple of days late shortly after leaving the hospital. What resulted was worse than anything she’d ever imagined: the interest rate on the card tripled, which triggered the doubling of the interest rates on two of her other credit cards. She alerted her credit card company that her payment was late due to her medical emergency, but to no avail.

Up to that point, Jean had never been late on her monthly payments and routinely paid more than the minimum balance. In addition to the interest rate hikes, one of her credit card companies recently reduced her credit limit by two thirds.

Jean did the math and realized that the increases in her rates would quickly lead to an unbearable amount of debt. Jean decided to take out a home equity line of credit to pay off a large portion of her credit card debt. This enabled her to reduce the impact of the interest rate hikes, but transferred wealth from her home to the credit card companies.

Jean describes herself as a conscientious person who is very careful about the agreements she engages in, and always tries to read the “fine print”. She is aware that if it can happen to her, it can and is happening to many others around the country.

Jean wants Congress to take action to protect consumers from these kinds of unfair credit card practices. She explains that “credit card companies are bankrupting middle class people. If your interest rate suddenly triples, there’s no way you can pay it.” She hopes that credit card companies will realize that sometimes mistakes happen, but consumers should not be penalized by excessive rate increases, reduced credit limits, or unfair credit reporting because the affects are real.

Janice of New York

"This is indeed ludicrous and criminal; I’ve been a customer far too long to deserve this treatment." —Janice

Janice has been a long-time customer of 20 years with American Express and currently holds three credit cards with them – Jet Blue, Delta Sky Miles, and Blue. Her credit history is flawless as she has never been late on a payment, and she has only recently been carrying a significant balance on her card.

On April 10th, Janice signed into her online account to pay a bill and noticed that her credit limits had been drastically reduced. Her $34,000 credit line was now $5,100 – slightly above her current balance, making it seem like she was using 95% of her available credit. Her other credit lines went from $2000 to $850, and from $15,000 to $1,000 even though one of these cards had never been used. Janice’s only outstanding debt was the $5000 on the card which originally had a $34,000 limit, most of which had been very recently put toward her mother’s funeral expenses in March.

Janice immediately spoke to an account manager at Amex, who first told her that her income could not support her credit obligations and then that her mortgages were too high. Janice explained to the rep, “the mortgages in question have been in existence for over five years and they’re paid on time all of the time.” The representative refused to disclose the income amount recorded in Janice’s file, but as Janice describes, “she did say that the amount on file was less than half of the amount that I quoted… [Amex] has an incorrect income figure on my file.” After explaining that she could pay the account in full by the next billing cycle, Janice was still unable to recover her original credit lines and sent a complaint letter to the company.

Four days later, Janice received three letters in the mail notifying her of credit limit reductions on all three of her cards. She noticed that all of the letters were backdated to the 2nd of April. Janice picks up her mail regularly and cannot believe that it took 13 days for these notices to arrive. Janice is most concerned about her FICO scores being severely and negatively impacted by the lowered credit limits – she explained, “This is indeed ludicrous and criminal, I’ve been a customer far too long to deserve this treatment.”

Ronald of Lumberton, NC

"the phone rep will not help, and will not transfer me to anyone who can until the [payments] are current." —Ronald

In June 2008, Ronald lost his job and now relies on unemployment checks as his only source of income. At the end of 2008, he was late on a payment by one day and his Chase Mastercard interest rate went from 4.99% to 24.99%. Prior to this, Ronald had never missed a payment and has maintained a great credit history.

A month later, Ronald made a payment online. He paid his bill on the due date, but because it was after 4:00PM it was posted as another late payment. Consequently, Ronald’s interest rate was increased another 5%, to 29.99%. In his frustration, Ronald explained “[Chase] is worse than a loan shark. Loan sharks charge outrageous rates but at least they don’t change on you.”

On multiple occasions, Ronald contacted Chase and was told that he could get help from an account specialist, but only after his balance was paid in full. Ronald describes, “the phone rep will not help, and will not transfer me to anyone who can until the [payments] are current.” Ronald decided to close the account, and he explained: “I have told them repeatedly that I can’t pay 29.99% interest.”

As soon as the account was canceled, Ronald’s interest rate was reduced and he received a check for over $500 to refund the money he had paid for the increased interest. A few weeks later, Ronald received an e-mail from Chase stating that he owed $200, yet the website will not let him make a payment because according to his online account he does not owe this money. Ronald has since sent an e-mail for clarification and is awaiting the reply.