Banks willing to help strapped cardholders

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Banks willing to help strapped cardholders
But credit-aid effort doesn't provide consumers the whole story
By Gail Liberman and Alan Lavine

Last update: 7:07 p.m. EDT April 13, 2009PALM BEACH GARDENS, Fla. TV and print ads invite credit-card holders struggling to make payments to visit HelpWithMyCredit.org or call 1-866-941-1030. Does this mean big banks are truly helping credit-strapped cardholders?
The answer, based on a spot check of major issuers, appears generally to be "yes." Despite published reports lately of increased credit card interest rates and fees, some banks say they proactively are contacting strapped cardholders to suggest solutions.
Video: American Express charges ahead
American Express is in better shape than investors think. Under CEO Ken Chenault, it boasts a premier brand, lots of liquidity and a less risky business model than competitors.Common offers of relief may include elimination of fees, lowering of interest rates and reduction of monthly payments. Some issuers say they will go so far as to forgive a portion of the balance.
So if it's been a while since you talked to your card issuer about getting relief from overwhelming credit card debt, it could pay to try again. A "Hardship" department might be a good place to start. The extent of the help you'll get, however, varies.
"Persistence is really a key," says Bill Hardekopf, CEO of lowcards.com. "Ask for a manager. Go up the ladder."
Callers responding to "Help With My Credit" ads automatically are patched to appropriate departments of participating credit card issuers or directed to an accredited credit counselor, says Joe Ganley, vice president at Weber Shandwick Worldwide, Cambridge, Mass. The bank coalition's Web site also provides educational credit information.
The coalition sponsoring the campaign, by Weber Shandwick's in-house New York ad agency Sawyer Miller, includes Bank of America (BACbank of america corporation com

The coalition offers to pick up the tab for a caller's first credit counseling visit at participating accredited agencies.
But check whether the agency you use is "approved" by the U.S. Department of Justice Trustee (check at www.doj.gov/ust) in fulfillment of the credit counseling requirement for bankruptcy -- just in case you later need to file. Not all coalition counseling agency partners meet that requirement. See the Justice Department site.
Shaving costs, fees and interest rates
Citigroup, spokesman Samuel Wang says, has created some new programs for those facing financial difficulty and expanded eligibility criteria for others. Among its options, based on a cardholder's situation and willingness to repay, are "match payments," in which the bank matches a percentage of a cardholder's payment over the minimum amount due for a specified period.
Bank of America says it has modified "more than 1 million credit card loans" since the beginning of 2008 and works with more than 400 nonprofit credit counseling agencies.
American Express , which both say they prefer to deal directly with their own cardholders, are not participating in the coalition media campaign.
But Chase says a reduced interest rate, which can run as low as 0 percent for those in the deepest financial distress, may extend over nine to 60 months. The deal negotiated "depends on the nature of the customer's situation and willingness and ability to meet restructured terms."
American Express late last year enhanced its programs, offering to reduce monthly payments as much as 40% for up to one year for certain customers. "In some cases, we're waiving certain fees and penalties they have incurred in the past," says spokeswoman Desiree C. Fish. American Express customers experiencing financial distress are urged to call 1-800-253-1709.
Fish notes, though, that unlike other issuers, American Express lets participants in debt reduction programs keep their cards. By contrast, other issuers may require that participants surrender credit cards.
Capital One, according to spokeswoman Pam Girardo, provides information for its delinquent cardholders at its web site, www.capitalone.com/solutions. However it has a hardship program both for current and delinquent borrowers experiencing financial difficulties. Check out the Capital One site.
A bank point of view
"Overall, they (banks) are doing more to advance consumer financial literacy than they did before and that's good for the country," acknowledges Robert S. Green, a partner in the law firm of Green Welling LLP, San Francisco. But Green, whose firm has multiple class-action lawsuits pending against banks, warns that the "HelpWithMyCredit.org" Web site lacks important educational information.
"People should know this is slanted from the bank's point of view," he says. For example, the Web site mentions the features and benefits of some credit cards, but fails to mention that cards come with arbitration clauses and class-action waivers. Such features, he says, may prevent cardholders from protecting their rights.
They talk about insurance as a good deal, but fail to mention that fraud protection programs generally are overpriced, he adds. Plus, federal law limits a cardholder's fraudulent charges to $50 anyway.
Green suggests that another less biased educational credit card resource is Consumer Action, www.consumer-action.org.
The "Help With My Credit" campaign comes as banks vehemently fight credit card consumer protection legislation making its way through Congress. Read more on proposed credit card reforms in Congress.
In fact, Consumers Union has established a Web site, www.CreditCardReform.org, to encourage consumers to contact their lawmakers to stem abusive credit card practices. See the Consumers Union site.