Banks Push Harder On Credit-Card Debt

[Purveyor]

As Delinquencies Rise, Creditors' Sticks And Carrots Include More-Aggressive
Collections, Offers to Cut or Postpone Payments

By JANE J. KIM

As more people struggle under credit-card debt, banks are stepping in -- to intensify their collection efforts.

Citigroup Inc. has hired more collectors, increased the frequency of calls to delinquent customers and expanded programs that let borrowers temporarily postpone payments or settle debt for less than the borrowers owe.

American Express Co. is giving some hard-pressed customers a break on their interest rate, fees or monthly payments. Bank of America Corp., meanwhile, is contacting late-paying customers earlier than it has in the past.

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The increased attention means that even consumers who have forgotten just one payment could get a call from the bank. "Rather than have a letter go out in 15 days, they might send it out in five," says Robert Hammer, an industry consultant who runs a bank-card advisory firm in Thousand Oaks, Calif. "There is definitely a sense of urgency in the collections effort."

The moves come at a time when rising unemployment and a credit crunch are forcing more consumers to default on their credit-card payments. The percentage of bank credit-card accounts that are delinquent rose to 4.51% in the first quarter -- the latest available -- from 4.41% in the year-earlier quarter, according to the American Bankers Association. Banks reported increases in delinquency rates in their second-quarter earnings reports, and they expect the problems to get worse. One sign of the debt to be reckoned with: On Monday, the Federal Reserve reported that revolving debt -- primarily reflecting the balances on people's credit cards -- rose in July at a seasonally adjusted annual rate of 4.8% to $969.9 billion. That was faster than the 3.5% rise in June.

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But the rise in delinquencies is also prompting banks to pass along past-due accounts to third-party collectors -- whose collection techniques can be more aggressive -- more quickly, consultants say. "As you fail to pay your bills, instead of dealing with the nicer people at the bank, you'll find yourself hearing from people who are more and more unfriendly," says Joe Ridout, a spokesman for Consumer Action, a San Francisco-based advocacy and educational group. Indeed, the number of complaints about collection tactics Consumer Action has received has doubled since the start of 2006, he says.

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WSJ: http://online.wsj.com/article/SB122100709651817495.html?mod=googlenews_wsj

[Ilsa]

1. Screw those MFers. I get a solicitation in the mail every stinking day from them.

They are asking for trouble, and then they wonder why their collections are down when people can't pay in this damn RepubliCon economy.

Thanks for posting Purveyor. I assume you are as fed up as I am.

[greguganus]

2. I'm thinking of becoming delinquent on my accounts so I can get a cheaper rate. n/t