Recently the Consumer Financial Protection Bureau has gone after some major credit card issuers. Their findings confirm there have been misrepresentations including, late fees charged illegally, false promises of approval on rewards cards, discrimination, deceptive telemarketing, and even as extreme as purposely signing customers up for products they were unaware had a fee.
This seems to be just the beginning. It brings home the point that even in our fast paced lives it is essential to take the time to look at the fine print and be vigilant about protecting our credit reports, scores, and credit card bills. Unfortunately consumers of all types, from busy home makers to successful hedge fund managers, are often distracted by the daily responsibilities of a demanding lifestyle. They can quickly find themselves with blemishes on credit reports, lowered scores, and charges on credit card statements they have not approved.
Day after day we come across clients who did not realize ignoring a minor charge they felt to be frivolous from a belligerent creditor could wind up costing them the home of their dreams or spending hundreds of thousands more in higher interest for it.
Alan was told by a telemarketing rep from his existing credit card company that if he agreed to try their new credit monitoring product he would not be charged additionally. This sounded like a good deal and he accepted. After six months of glancing at his credit card statement thinking the total balance looked right he decided to do a thorough check of each charge listed. He noticed an additional $10 charge on his credit card statement. As he thumbed through past statements, he found it posted monthly for the past 6 months. When he called the creditor to complain they confirmed that he agreed to the purchase of credit monitoring and they refused to waive the charge from his bill. Alan was so angry he vowed not to pay the extra fees on principal and proceeded to close the card.
Little did he know between the cost of closing the account to his aggregate limit on revolving credit and the $60 balance turning into a collection his scores reduced by 80 points. His 760 score went down to a 680. During this time Alan wanted to refinance his current mortgage of $500,000 having a rate of 5.5%. In today’s mortgage environment the current rate he was looking to get approved for is 3.25%. His payment would go from about $2800.00 a month to a little more than $2100.00 saving him around $700 a month and almost a quarter million dollars over the life of the loan. With his score reduction, at best he would have to pay a higher rate or heavy points upfront. The higher rate could cost almost $40,000 in overall savings and at worst he could be rejected for the refinance and have to pay the extra quarter million.
With a new clearer view of all the mistakes, intended or otherwise by creditors, it becomes apparent that being an advocate for your own credit and aggressively protecting it can benefit the quality of life for years to come. If Alan had requested the telemarketer send the terms to him in writing before accepting the monitoring product or paid the $60 and fought the charges later he could have saved himself an enormous amount of frustration and cost.
For almost 25 years people have been coming to us for help after experiencing these types of credit issues. Fortunately for the majority of them we were able to resolve this problem with the creditor and have the errors corrected.
Feel free to call us with any questions or feedback on credit challenged clients or credit in general! Visit our website www.northshoreadvisory.com for more information and to connect with us on all social media.