Money Matters: It’s Time To Fight Back

By Gary A. Johnson

I don’t know about you, but I’ve had enough of the banks and credit card companies taking advantage of hardworking consumers and people who consistently pay their bills on time.  Not all of the people struggling to pay their bills and meet their financial obligations used to have good credit, but have fallen prey to the revolving credit card industry and/or hard times.

The current downturn in the economy has made life “tough” for millions of Americans.  “Tough” is a relative term, in that “tough” for some people is cutting back on their Latté’s and the housekeeper.  “Tough” for others means they have no savings and are about to lose their home.

I own and operate a small business.  I’ve tried to grow my business and like millions of others businesses, the economic downturn has negatively impacted my company.  In fact, the terrorist attack on our country that occurred on September 11, 2001 was the beginning of the loss of revenue for the company.

As a result of trying to hold on to the business I used my sterling credit rating in the form of credit lines to fund and eventually restructure the business.  I’ve had a 30-year relationship with the American Express company.  As a result I was able to secure a business line of credit via both gold and platinum corporate cards.  I selected American Express because they offered services that were supportive of small businesses.

Imagine my surprise when I received a letter from American Express informing me “that after a thorough review” of my credit profile they have placed a spending limit on my account.  My first reaction was OK, times are difficult and many banks and companies are tightening their credit and lending practices.  As I continued to read the letter, I was informed that my credit had been drastically reduced.  I went from a six-figure credit line to a low four-figure limit. In fact, the limit is so low that I cannot run my business with the new limit.

Let me put my situation in perspective.  My company has no history of late payments or outstanding balances. In fact, my last month’s statement had a surplus balance.  American Express showed their appreciation by crippling my ability to run my business.  Their actions clearly indicate that they no longer wanted to be a business partner with my company. Thank you American Express.  When it’s all said and done, I think I will reflect on this situation and realize that this was a turning point in my company’s financial independence.

I would not dare compare what’s happening to American consumers to “mafia-like” tactics.  That would be an insult to the mob.  However, I can’t help but wonder if consumers would be better off if their accounts were managed by organized crime.  Many of these banks, were forced to take tax pay dollars.  Some of the banks needed the money to survive and others did not.  American consumers were misled.  Through a series of press releases and announcements, consumers were led to believe that some of the financial institutions who took the money were going to help consumers with their debt.  Many of these banks took our tax dollars and wiped the books clean of their debt and mismanagement and proceeded to make more money by screwing consumers with tricky fees and raising interest rates without warning or on a seemingly ad-hoc basis putting their customers deeper in debt.

The Obama administration says they recognize that what’s happening to consumers is not fair.  They tout the Credit Card Accountability Responsibility and Disclosure Act that outlaws several of these credit card policies that have sparked consumer outrage including retroactive rate increases on existing balances for cardholders who are in good standing.  Other deceitful tricks, albeit legal, include hiking rates for new charges without at least 45 days’ notice; “double-cycle billing,” which allows fees to be charged for balances that were already paid off; and “universal default,” which applies rate hikes if a customer is late with payments on unrelated bills.

Sounds good doesn’t it?  I wouldn’t pop any champagne just yet.

The new law amends the Truth in Lending Act, which only governs consumer loans.  It does not apply to corporate cards.  Say what?

What this means is limited liability corporations and other companies that use traditional corporate cards, the same old rules will continue to apply.  Let me translate this in a more vernacular kind of way:  Some of the credit card companies will continue to have the legal authority to insert a golf umbrella in your rectum.  Other companies will try and open the umbrella.

It is time to fight back.  I’ve decided to use all of my business adversity to motivate me to do better.  To work harder, be smarter and do what I can to help others who have it worse than me.

I can’t quit.  I have faith that I will not be down for long and I will emerge from this downturn stronger than ever.

American Express’ decision to reduce my spending limit has crippled by ability to conduct business.  I was upset.  I only allowed myself to stay upset for about 30 minutes.  My net move was to fight back.  I decided to fight back strategically by terminating my relationship with the company.  Consumer advocates tell you NOT to close your accounts immediately because this action can impact your credit score in a negative way.  I have enough credit lines and alternatives.  I’m willing to take that risk.

I called American Express and when the Customer Service Representative (CSR) came on the line she announced her name and asked some identifying information to confirm that I was the cardholder.  Her next question was:  “How can I help you today?”  Before I could answer, the CSR replied, “Oh, I think I know why you’re calling.  You received a letter about your spending limit.”

I wanted to make sure that my call was being recorded for accuracy.  Once confirmed I calmly asked the rep if my account was in good standing.  She acknowledged that it was.  I then asked if I had a history of late payments or outstanding balances.  She she acknowledged that this was not the case.  I asked why my spending limit had been reduced.  She explained that my credit report reflected high balances on some other accounts.  She then suggested that I get a copy of my credit report and work to reduce my card balances with the other lending institutions.  The rep also was sure to let me know that American Express would re-evaluate my situation at a later date.

I explained to her that I was aware of the contents of my credit report and that I have no history of late or delinquent payments.  I am in good standing with all of my creditors.  I advised the representative that American Express has their method for dealing with customers and I have mine.  My method involved dealing with companies based on how they dealt with me.  As a result, I don’t like how I’ve been treated and advised her that I wanted to close my account.  The credit card companies don’t want to lose your business, but every action has a consequence.  I’ve decided that it was time for me to part ways with American Express Corporate Gold Business card.  During my company’s heyday, I would generate $5000 to $10,000 dollars a month in charges.  The company would get their money within 30-days.  Those days are over.  By their actions American Express has told me that they no longer want to be a partner as they have been in past years.  I’m sure they want more of my money, however, when business gets better, I will give my business to a company that demonstrates that they want to work with me during both good and bad times.

I am in the process of getting a pay off balance, cancelling my account and moving forward to reduce my debt to credit ratio to become less dependent upon the banks and credit card companies.

I really feel good about this action.  This was my way of staying empowered.  If more people took small steps like this, we would send a message to the predatory bank and lending institutions.

I am not an economist, but I believe this country would have been far better off if every citizen’s debt was reduced by 50%.  We would not need a Stimulus package, recovery money and all of the other programs, many of which will result in waste and fraud, again costing the taxpayer more money.

The president of the American Bankers Association says the legislation “changes the entire business model of credit cards.  “Edward Yingling says it restricts the ability to price credit for risk — in other words, to charge more for those more likely not to repay their debts.

Lots of people pay off their credit cards in full each month to avoid finance charges.  This is not good enough for some credit card companies.  Some industry experts say credit card providers might start charging new fees for their cardholders and could raise their interest rates.

Don’t get mad people, get strategic.  Consumers need to find a way to fight back against the credit card companies and lending institutions in a manner that will allow them to stay empowered and be whole.  This philosophy has worked for me.  This is how I maintain my sanity.  Folks, I’m one of the most blessed people on earth.  I have a loving family which serves as my support structure.  How do the folks who don’t have a support structure surviving?

I would suggest that everyone in need assess your skills and abilities and look for opportunities to prosper, even during these terrible economic times.  Times aren’t bad for everyone.  Many people and business have not been affected by the economy and others are thriving.  Come on people!  Let’s get started!

The Isley Brothers had a song out years ago called “Fight The Power.”  Fight it!  Fight the power!

Gary Johnson is the Founder & Publisher of Black Men In America.com a popular online magazine on the Internet and the Black Men In America.com Blog. Gary is also the author of the new book“25 Things That Really Matter In Life.”