How One Debtor Resolves Her Credit Card Problems

by Silicon Valley Blogger on 2009-09-1625

There’s this lady who decides to revolt and bail out on her debts. If her information is accurate, her reasons seem justified (though some will be compelled to criticize her actions):

The summary: this very courageous (or foolish? you decide) Bank of America customer gets peeved over the hike in her credit card rates to 30% even though she is a good customer. She calls BofA to try to negotiate her rates and instead, they refer her to a debt counseling and consolidation service (the problem is not with her budget). Hmmmm…..

So now she’s fed up and decides to send a message to the “banking elite” through YouTube: She’s going to halt her payments and won’t be paying off her credit card debt until she gets her original rate back or unless the bank decides to give her a too-good-to-pass pay off offer. “Stick that in your bailout pipe and smoke it,” she tells them.

Hearing her outcry and call to action, would you be willing to sacrifice your credit score to make such a statement? Here’s the video:

It seems that the banks and card companies do their bullying in the hopes that most of their customers would just roll over and pay up. But there will be customers who aren’t going to take it — these are the people that card issuers should be listening to and negotiating with. These customers are willing to keep paying off their debt at reasonable rates but by pushing them over the edge, card issuers are leaving them no choice. So the harried card holders are going to do the drastic thing and bail out on their debts. I think it’s pretty stupid for these financial institutions NOT to realize this.

Can’t BofA see that their customers just want some fair and reasonable treatment? Oh I forgot, all that went out the window with the subprime meltdown. Apparently, taxpayer bailouts haven’t been enough. Banks have to put the squeeze on their customers too.

So who’s going to blink first? Well, who’s got more to lose?

Lazy Man’s Plight

All this reminds me of the story of a friend of mine: someone else who’s fighting the good fight is my buddy Lazy Man. If you haven’t heard his story yet, it hasn’t been a bed of roses for him recently. He’s been slapped with a cease and desist order from a big corporation (MonaVie of Acai Berry fame) for alleged trademark infringement, but really, they just don’t like the “negative publicity” that Lazy Man has heaped upon them with his writeups. If these were glowing reports from a blogger, they would never make such a stink.

I wish Lazy Man all the luck on this one. You can check out his update on the case: MonaVie Sends A Second Cease & Desist, as well as the original MonaVie article that started it all. It would be great if you can stop by at Lazy Man’s site to share your support.

Copyright © 2009 The Digerati Life. All Rights Reserved.

{ 25 comments… read them below or add one }

Len Penzo September 16, 2009 at 7:36 pm

I have no sympathy for this lady. Sorry. She is acting like a petulant child and she will get everything she deserves with respect to her future credit score by her act of “civil disobedience.”

Am I up a tree or does she give off the impression that she thinks credit is a right, rather than a privilege?

A better act of defiance would have been to transfer her balance to a different card, if possible, or pay off the balance as fast as possible and then cut up the card (but not closing it).

Good luck, lady. You’re going to need it! 8-P

My $0.02 (after taxes),

Len Penzo dot Com

Silicon Valley Blogger September 16, 2009 at 8:08 pm

Agreed Len, although I’ve heard reports of people with good credit who have been skewered by their card issuers anyway even though they haven’t done anything to “deserve” such changes. This lady claims she’s been diligent and responsible about paying off her cards and this is what she gets.

But yes, I can see both sides to this. I also feel that if there are people who are doing their best to resolve their debts, that they should be given a chance. Now if this lady carries a balance transfer card whose intro period merely lapsed and now she has to pay rates she KNEW were going to skyrocket after some point, then YES, she needs to face the music and quit whining. But if this is a random rate hike that the issuers enforce on customer just because “they can”…. well, then I’d decry it.

So I guess our response to this should be based on the facts behind it. Unfortunately, we’re only hearing this woman’s side of the story; we don’t have the full picture and so we can only surmise.

traineeinvestor September 16, 2009 at 9:10 pm

I have zero sympathy for her.

As you say, if she was on a zero rate deal an knew it was about to expire…..

Even if she carries a balance and is now being asked to pay more, the analysis is still exactly the same. She signed an agreement which allows the bank to change the interest rate from time to time at the bank’s discretion. It is expected that banks would only raise rates in response to increased costs being experienced by the banks – which is exactly what recent changes to regulations are doing.

If she doesn’t like it, she should repay or refinance. Using the rate increase as a pretext to walk away from her debts is dishonest (as well as stupid).

One of the conseqences of people who refuse to pay what they owe is that it pushes up the costs for those who do.

Mogden September 16, 2009 at 9:16 pm

The previous commenters sound like they come from “old America” with its strange concern with personal responsibility. In “new America”, credit is a constitutional right, and there’s no reckless behavior a bailout or subsidy from the Federal Government can’t fix, preferably directed at the least productive and/or most well connected members of society.

Silicon Valley Blogger September 16, 2009 at 9:20 pm

I still think 30% rates are obscene, no matter how you look at it. I realize too that banks, credit card companies are out there to make money, but they’ve messed up and of course, they’ll pass some of that cost to customers.

Times are hard and some people have been caught unprepared. Some just need a bit of that missing sympathy to help them get their debt paid. It’s the same as that whole issue with people walking away from foreclosures and upside down mortgages. Wouldn’t lenders prefer to salvage these people rather than have them up and go?

As I mentioned, it’s a game of bluff…. as some of these people say — they’re the ones with nothing to lose except for their credit, and they’re willing to deal with it. Interesting discussion here.

There may be other options for this woman but she’s trying to play hardball.

@Mogden, appreciate the sarcasm. 🙂

Leo September 17, 2009 at 2:28 am

When all the banks in wall street line up for a bail out I think she took the cue from them.


Ellen September 17, 2009 at 7:01 am

On the one hand, I would never do what she is doing because I don’t think it is the best way to handle the situation…

On the other hand, isn’t this exactly what the big banks did to get their bailouts? Whined and whined about debts and overwhelming costs, then the government pulled tax money to relieve them. So, with this great example of how whining can get you other people’s money to pay off your debt, why wouldn’t she be doing this?

It’s the trickle down of how people are following the example set by big financial institutions in the first place.

Craig September 17, 2009 at 7:39 am

Sounds like a bad move because BOA will not blink first they have nothing to lose compared to her who can have her entire financial future wiped out. Unless the negative publicity gets too bad (having the video on your blog helps) this will bite her in the ass big time. I disagree with BOA ways and the consumer should get her rates to what they are.

Lee September 17, 2009 at 9:04 am

She signed a variable-rate credit agreement, and the rate varied? I’m really not following her line of thought here.

Silicon Valley Blogger September 17, 2009 at 9:20 am

It does appear like a bad move from one person’s part. 99.9% of us won’t pull this. I think it’s what it is — she’s trying to incite a revolt. Trying to be the first to make a stand, hoping that others would follow suit to make a point. Perhaps it’s not the fact that variable rates exist, it’s the fact that they’re so high…. I think this lady is protesting the 30% rate….

Since I don’t carry a balance, seeing numbers like these make me dizzy.

Jim September 17, 2009 at 10:18 am

But her rate isn’t actually 30%. There is a pop up comment thingy during the video at time 0:51 that says her APR is actually 23.7% rather than 30%. I’m not sure why she’s whining about 30% when her statement actually says 23.7%. Didn’t read the statement right? Mistook a 2 for a 3?

What was her rate before? Maybe they just jacked it up 1-2% points. Maybe she had a introductory offer rate and it adjusted to the standard rate.

Given that she rants on for 4 minutes about 30% rate when it was actually 23.7% I have to wonder what other useful details she got wrong or forgot to tell us about.

She claims her budget isn’t a problem yet she apparently has debt, no asset and no income. I think she may have more of a budget problem than she claims.

Silicon Valley Blogger September 17, 2009 at 11:05 am

I believe there are many takeaways from this which we’ve all pointed out:
1. Take personal responsibility for your finances.
2. Ruining your credit for a cause like this is plain foolish.
3. So it’s not that easy to negotiate with your issuer. I guess it only works if you’re truly someone with good credit. This woman claims she has “good credit”. If you are to believe her, then negotiation should work. If not, then she should take the bitter pill and swallow it and learn to live within her means. But something tells me that there are salvageable cases out there that aren’t given the leeway that would allow them to resolve their issues productively.

So here’s the thing — is hardball really the answer? If you can prove you can pay off your debts at 15% vs 23% (or 30%), rather than become a writeoff, wouldn’t the bank prefer this (same story with walk away mortgage holders)? As traineeinvestor mentioned — refinancing may be a good idea. But I was just curious: Is it truly the case that banks would prefer to write you off rather than work with you on these things? I’m not defending a revolt, just seeing another side of this story.

MLR September 17, 2009 at 7:30 pm

If her budget is in line, she doesn’t really have to worry about her credit score.

She can always have a loan manually underwritten (the way they used to do it before FICO!).

I think their is a fine line between usury and allowable interest and unfortunately banks have the government on their side. 30%, to me, is approaching usurious.


Tim September 18, 2009 at 5:29 am

here’s fair and reasonable treatment: stop living beyond your means and charging your stupid credit card.

rcwills September 18, 2009 at 8:44 am

I feel sad for her. Rather than opting out of the credit card when they upped the rates (and she has the legal right to do so), she instead chooses to make a stink and destroy her credit in the process. If she was content paying the old APR (and apparently she was), then she could have closed the account, and continued paying BoA her monthly minimum balance due.

Silicon Valley Blogger September 18, 2009 at 10:49 am

Easy for us to point the finger and blame the consumer. Yeah, many consumers have been in the wrong for so long — living beyond their means. But so has certain pockets of the financial industry (and big business). I’m tempted to think that what’s good for the goose is good for the gander. So banks and ailing industries get huge bailouts but consumers don’t get much slack?

As Tim says: stop living beyond your means and charging your stupid credit card. Well, I’d say the same for the big corporations out there. We all need an attitude overhaul!

Paula at September 18, 2009 at 10:59 am

I understand that this woman is upset, but it boggles my mind how she is willing to sacrifice her personal financial future “for the cause.”, the company I work for, has posted a response to this video on their blog which highlights some simple steps that she (or anyone) can take to resolve the situation, walk away and essentially give BofA the finger.

For anyone interested, you can find it here.

Jim September 18, 2009 at 12:52 pm

I’m all for giving consumers some ‘slack’ in general. But credit cards are unsecured debt and already have laws regulating them. I really don’t know what kind of ‘slack’ we should be giving people. Didn’t congress just pass credit card reform? That should theoretically help.

I don’t thik it would be smart for banks to give good interest terms on credit card debt to bad credit risks. From what I can see this woman does not present a good credit risk.
I just don’t see why this woman in particular should be getting a lower credit card interest rate or why her increased rate is anything that should warrant my concern. I don’t know what she charged up on her credit card, for all I know it was for frivoluous spending on shoes, starbucks and eating out. I don’t know why the % rate was increased in the first place.

Theres nothing stopping her from defaulting on her debt. That will trash her credit. It will be evidence that she is in fact a poor credit risk. Kinda seems to me like she’s just proving them right…

Silicon Valley Blogger September 18, 2009 at 3:27 pm

Maybe this lady isn’t the right example here…. but I know some people who are actually responsible credit card holders with decent credit who have surprisingly been given the shaft (something that sounds like this case). But you’re all quite right — card companies say in the fine print that they reserve the right to change rates at any time, and that most of us think and feel that owning a card is a right, not a privilege.

Well, the assumption here is that this lady’s case is legitimately her fault, and while that may be the case, I do believe there are still some good credit consumers who have been negatively impacted by their card company policies. As has been reported, these so called abuses are the reason for the new “credit card bill of rights” and new regulations that are being put into place by our new administration.

Or maybe I am still recoiling from my Advanta business card loss. They left a lot of consumers up the creek when they closed down their credit card division due to biz losses. There’s nothing we can do, of course, but it was a pain in the arse to deal with.

Ben September 19, 2009 at 10:34 am

I gotta agree with the above comments. I feel no sympathy for her. People just need to learn responsibility, to stop living beyond their means and actually save up for things!

kitty September 20, 2009 at 7:56 pm

Zero sympathy. When she decided to use the card she agreed to terms. The main reason her rates when up in the first place is because the default rate is high so banks have to compensate for losses.

Those who talk about these evil banks, here is a math problem for you. The average rate of defaults on credit cards right now is around 10%. But this is average. It means that customers who based on some criteria are considered low risk; others are higher risk. So let’s say you lend $1000 and you think your risk of default is high e.g. 20%, which rate would you charge? If it is too complicated, it means you’ll lose $200. So from your other customers you need to make up $200 plus gate some profit, at least enough to pay your employees, taxes, etc. 30% doesn’t seem like such a high rate anymore, does it? Now this lady may have always paid on time, but there are other reason why she may be high risk – e.g. high balance. Given her behavior it seems the bank was right – she is a bad risk.

Here is how lending works. Higher risk = higher interest rates to compensate for losses. Credit is not right. Bank is selling a service. The service can cost more or less depending on economy, expenses, environment. The business can raise prices at any time. If too many people are stealing, the business responds with raising prices for honest customers. It is not fair, but life is not fair. It’s the same with banks. People like this lady doesn’t pay – other people pay more.

Ray October 1, 2009 at 6:57 am


FAIL on her part to not speak with a different CSR but more likely Manager. Does she not understand negotiating and using all of her powers to get what she wants? Just because BoA tells you something doesn’t mean that’s the final straw. I’ve gotten 95% of what I wanted when I’ve had an issue with a CC company. Sometimes it takes multiple calls, but the bottom line is to know how much power you have, ask to speak directly to a manager and persist to speak with one if denied or one is not available and explain your situation in a calm and professional manner having facts on hand or other alternatives available, such as switching to another company who will be more than willing to let you do a balance transfer from BoA.

If all else fails be prepared to depart the company and pay off your balance or as a last resort tell a small white lie and act as if it’s true and you would be amazed at how quickly a company such as BoA or any other bank or CC company will be more open to give you what you want.

It’s amazing once you empower yourself with knowledge how quickly you can get the results you want in the end.

Michele October 18, 2009 at 6:27 pm

Sometimes a company just won’t negotiate with you. Sometimes, the actions of one credit card (like for example a card taking your limit down from 25K a year to $2500 year and thus ruining your credit to debt ratio) company will escalate to a cascade of rate increases on every card you hold. Suddenly you are looking at 3 cards charging 25-30% up from 10 or 12% – Because they can. Its a tough pill to swallow. Especially when you are doing everything they asked you to do and then they changed the rules on you.

My answer to this is to pay them off and don’t use them. They are not in business if they don’t have customers, and since they have forgotten that WE are the customers, I choose not to do business with them.

Richards Hary December 29, 2009 at 5:23 am

Thank you very much for the info. Credit cards always comes with lots of troubles always. I suggest to avoid it or to reduce the usage to minimum. But of course, its necessary now.

dianakoeck April 20, 2011 at 11:48 am

YES!!! I did the same thing years ago and it is time to do away with “paper” money that no longer represents anything (not backed by gold, silver, or any tangible THING) , and realize that our entire system is WRONG. More people than ever are in prisons and jails, our planet’s resources are running out, and rather than being “in a state of terror” aimed at strangers in our neighborhoods, we should be MAD at the “elite” who have systematically plundered our planet of resources and have turned us into a land of “debtors” and brought back “debtors prison” (i.e. what happens if you can’t afford to pay a traffic citation or a tax bill?). Another revolution is needed before it’s too late to save our planet.

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