Beware: Bank Credit Cards – 2

In a reply to my earlier post, reader Hal Osterbann writes:

“Your article appears to focus on how to avoid keeping your part of the agreement…If in fact you had the funds available – it would seem to the bank that you were CHOOSING to ignore your part of the agreement. And it is only logical that they should begin collection procedures.”

Hal – you missed the point of the article!

Hal, you are absolutely right that at some point the bank does have a right to say “you have $2000 in your checking account and you’re three months past due on your Visa, so we are going to freeze your funds until you bring your Visa current.” I have absolutely no problem with that.

My points were (1) the banks are freezing accounts without any warning, and (2) they are also extending their actions to accounts owned by third parties that would not normally be responsible for paying off another person’s debt – such as your elderly mother’s or a disabled relative’s account that you hold Power of Attorney responsibilities.

In my specific case, my bank account was frozen – not because I was late on any payments or ever had been – but because a relative of mine (who, several years before, briefly had signatory authority on my account while I was in the hospital having open heart surgery) fell behind on a credit card issued by the same bank.

Adding to my frustration is the fact that in 2005 the bank was specifically directed to remove all other names associated with the account after I married and had my new wife added to my bank accounts. The account representative assured me then that she had deleted all other names (this was during a personal visit to the bank), but the bank manager apparently overlooked one minor account that I no longer used but might have had a few dollars left in it. That’s all it took for the bank to find a connection four years later, however remote it might have been, and take action to freeze my account as well as those belonging to my relative.

The truth of my case is that I have been a customer of this bank since 1966. During that time I have had checking, savings, and investment accounts there – some that at times approached the bank’s insurance maximums. I’ve had several auto and personal loans – and still have a Visa credit card with a small balance. In 43 years I’ve never missed a payment on any debt that I’ve owed that bank. In spite of those facts and without warning, they took my accounts hostage to force my relative to pay up on a credit card that I had absolutely no connection whatsoever.

I have been one of that bank’s most faithful customers. When I lived in Texas for ten years (1985-1994), I kept the account open – even though some of my privileges were suspended because I lived outside of the bank’s service area.

When I filed bankruptcy several years ago (thanks mostly to medical bills left uncovered by my limited health insurance policy), this particular bank held the only unsecured bank credit account that I insisted on reaffirming – in spite of my attorney’s objections.

When I moved to Oregon in 2006 I kept that bank as my primary financial institution. I conducted business as normal by using local ATMs and online banking to manage my affairs – and continue to use that bank exclusively for my savings and checking accounts.

This situation might be understandable if I was ever a guarantor, co-signer or co-user – but my name has never been connected with that relative’s accounts in any way. But in my case, and clearly for thousands of other banking customers, the bank does not seem to care if there is or has been a formal legal connection between the parties and their personal banking business.

So what’s next?

If I suggested that a friend or family member move their accounts to that bank, is the bank going to hold me responsible for their debts because of my recommendation? If there is another customer in the bank with my same surname – are they going to assume that we are related and base their punitive actions against me on that basis?

The Internet has hundreds of these types of experiences described in blogs and comments. The one I quoted briefly in the original article was a comment to an online newspaper article.

I’ve managed to work out my particular problem and was fortunate to have other resources to fall back on. But what about a poor little old woman whose son just lost his job and he’s listed as having power of attorney on her accounts? What does she do? What can she do?

I intended that my previous article be a warning to our readers to be aware of what their bank might be capable of doing. In no way am I suggesting that people stop making payments on money rightfully owed to their bank or any other financial institution.