Two recent unpleasant experiences – one with a bank, the other with a credit card issuer – have taught me that financial institutions can sometimes be boneheaded and inflexible.
The good news is that sometimes these lenders will admit their misdeeds or mistakes when challenged by a customer.
In both cases, the financial institution eventually saw things my way and I got what I wanted. I won’t identify these institutions because I dealt with them as a customer, not a reporter. And I suspect the poor service I initially received may be typical of the banking and credit-card industries.
My first unpleasant experience – or, rather, series of unpleasant experiences – came after my wife and I decided to convert our mortgage into a home equity line of credit in order to lower our monthly payments. Our neighbourhood branch of the bank said we could do this, but there would probably be legal costs.
While in the branch, I strongly questioned why there should be any legal costs, since we were not seeking to borrow any more money. I subsequently wrote a letter to the branch manager inquiring how much these costs would be. I got no answer to this letter, nor to a followup letter, nor to two telephone messages.
So I sent a registered letter to the bank’s president and quickly got a call from the neighbourhood branch saying, “Come on in and raise your line of credit with no legal costs.”
But there was a snag when we were required to sign a clause pledging to pay prime rate plus 10 per cent in annual interest on our line of credit. The loans officer explained that the clause didn’t really mean what it said. It was something to do with any future increases in lending rates, he explained.
“I can’t possibly sign this,” I said, only to be told I must sign if I wanted to raise my line of credit limit in order to transfer all of my mortgage to it. But then I realized I was locking in to an interest rate of less than three per cent annually for the next two years. And if in future the bank wanted to greatly increase the interest rate on the line of credit, my wife and I were free to take our business elsewhere. So, with objections, we signed.
Then, several weeks after the limit was raised on our line of credit, we received a bombshell letter from a vice-president of the bank informing us that the transaction was subject to legal fees and other costs totalling $695.
We were panic-stricken. We could not possibly agree to pay this sum. It was a matter of principle. I visited the neighbourhood bank branch the next morning and the loans officer explained that the letter was a technicality. The sum had been charged and then withdrawn, he said. But why was this letter sent to us?
I sent another letter of complaint to the bank. In reply, a bank vice-president sent us a letter of apology and enclosed a gift certificate for $100 to be spent at a well-known restaurant.
And now for my second story.
Indirectly, this increase in the limit on our line of credit caused us headaches when my wife and I applied soon afterwards for a new credit card from another financial institution.
To establish my identity, I was required in a phone interview to answer a series of multiple-choice questions. One of the questions was: “Which branch of your bank did you deal with recently in raising your line of credit?”
I was stunned to be told my answer was incorrect and my application for the card had been rejected. Subsequently I realized that the bank branch on file with the credit bureau was one near my previous address where I lived 15 years ago when the line of credit was established.
I complained by phone to a manager of the credit-card issuer, who was sympathetic and said the same thing had happened to him after he moved from one Canadian city to another. He said I should try again to apply for the card over the phone. This time I completed the questions, but again my application was rejected.
I called the manager a second time. He looked at my file and explained that this time the application had been rejected because my income was too low.
During the application, I had been required to state my annual income. Since I am mostly retired, my annual income is not what it once was. I live partly on government and private pensions, partly on savings.
Surely savings become “income” when they are spent on paying credit card bills and such? Isn’t it discriminating against seniors not to count savings as income for the purpose of obtaining a credit card?
Again the manager was sympathetic. He asked me to hold. A few minutes later, he came back on the line. Upon review, my credit-card application had been approved, he said.
Bingo! My hurt pride was restored. I had struck a blow for seniors. I had put a credit-card company in its place. And I was two for two in my most recent interactions with banks and credit-card companies, proving it does pay to stand up for yourself when it comes to dealing with financial institutions.
Michael Prentice is OBJ’s columnist on retail and consumer issues. He can be contacted at firstname.lastname@example.org.