What Sparked My War on Debt

War on DebtHere’s one from the archives. I wrote this to a consumer complaint web site in September 2006 after MBNA Bank of America jacked up my interest rate. Thanks to Me vs. Debt for reminding me to dig this up.

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My complaint is against MBNA, which was recently purchased by Bank of America.

MBNA is a predatory company. It’s recent practice of imposing usurious interest rates without warning may be legal, but it is unethical to the highest degree.

If you have an MBNA card, pay it off as fast as you can, lest you become their next victim. If you are shopping for a credit card, avoid MBNA at all costs.

Why do I say this? Here is my story…

I have a Family Christian branded card through MBNA. The balance was over $15,000. I had made payments on time for well over two years.

Then, all of a sudden, BANG! My interest rate soared from around 11.99% to 24.99%.

I called to find out what had happened. I hadn’t missed any payments. I was (what I thought) a good customer.

No, the change in interest rate was intentional, a customer service rep informed me. I asked him to lower it. He said the best they could do was lock in an interest rate of 23.99%. Then they asked if I had considered doing a 2nd mortgage to pay off the credit card. I told them I had, but that I would never do business with any company associated with MBNA, not after they had violated my trust.

That day, I waged war on MBNA. In two months, I have paid off $10,000, with full intention of paying off the balance as soon as possible.

Yet I called again today and asked for them to lower my rate a second time.

They told me they could possibly lower it to 6.99% if I did a balance transfer. Otherwise, the best they could do was 20.99%.

Every time I ask, they will only lower my rate if I will do more business with them. I will not. If I transfer at 6.99%, who knows what will happen? Maybe they will raise my interest rate to 40% two months from now. I cannot trust them and I will not do business with them ever again.

On a side note, I’ve noticed that if my payment arrives at MBNA even one day late, I will be charged a $39 late fee. They do business 7 days a week. If the due date is Sunday (which it has been), and my payment arrives Monday, I get slapped with a late fee. This is another example of MBNA‘s complete disregard for treating customers right.

Now, let me offer some praise to a company that does it right: USAA. This is the best company I’ve ever dealt with. Over 7 years, I’ve not once had a bad customer service experience.

The USAA credit card is phenomenal. My interest rate is consistently well under 10% (usually around 7%). If my payment arrives a day or two late, I am not charged any late fees. USAA is the exemplar of world-class customer service. Other companies should aspire to their high ethics. If you can get a USAA credit card, or get insurance through them, by all means do so. They get my absolute highest recommendation.

Ryan Healy

P.S. I find it ironic that Family Christian bookstores is associated with a company that employs such unethical business practices. They should be ashamed of their association with MBNA.

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8 thoughts on “What Sparked My War on Debt”

  1. Hey Ryan,

    I’m in agreement with you. I actually have an MBNA credit card through Bank of America and have not only been hit myself with the interest rates, but also the $39 fees on a couple of occasions.

    I’ll make it a point to pay it off fast. Fortunately it was just a $500 credit limit, but you’re right, it is poor practice. I don’t even use the card any more, I thought I might have been building some kind of good credit by keeping it open, but regardless, the interest rates are too high as you’ve said. Thanks for the wake up. -john

  2. Hey Ryan.

    First of all, thanks for the feedback on my somewhat angry post. You pretty much hit the nail on the head with the Fight Club comment!

    It really makes me feel sick to my stomach to hear how you were treated by MBNA. Predatory is exactly the right word to describe a banks like this. They obviously know how to identify people that are struggling to make minimums and they create a perpetual trap. They don’t care if you ever get out, only about maximizing their profits for the duration. Perverse greed.

    On the bright side – I’m really, really happy to hear that you were able to pay off your balance. Unfortunately most people are not in that position… which is why the companies think they can get away with it.

    I’m looking forward to checking out the rest of your blog. This post obviously hit close to home. Right on with the army men. This is war.

    -Amanda

    (P.S. Thank you for the warning about MBNA. I am not a current customer and do not plan on becoming one.)

  3. I actually just started MBNA a few months ago. Mainly because they offered 0% interest for 12 months on a balance transfer.

    I went over their agreement in detail. If I am late on a payment they’ll jack it up to 24% immediately. But since my other card is 21%, the option of having 0% for 12 months (by which time I can pay off the balance) seemed worth the 3% risk.

    I have a computer generated schedule that reminds me when statements are issued. I then check online (don’t wait for the mail) for the minimum payment amount. Pay it with electronic banking, then check back to make sure it processed on their online statement.

    It’s a bit of an irritation but worth saving the 21% interest I was paying. If they mess with me, I’ll just tranfer back to the other card.

    Thanks for the warnings Ryan, it will keep me extra vigilant and hopefully I can beat them at their own game.

    John

  4. John R. – With a $500 limit, you should be able to pay that off in no time.

    Amanda – Thanks for dropping by. Yes, I’m probably the minority in how fast I was able to pay off the balance. Lots of other people are not so fortunate. You’re welcome for the warning. :-)

    John M. – You can’t beat 0%. Sounds like a good system you have for avoiding late payments. Best to be vigilant with these sort of things.

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