Miriam Majors, a nurse, was featured on a Dec. 16 segment on the CBS Evening News. Bank of America had raised her credit card rate from 7.99% to 28.99% because it noticed that Majors' credit limit on another card had had been slashed from $23,000 to $15,900 and her credit score had dropped 50 points, said CBS reporter Mark Strassmann. The practice is called "balance chasing" and banks worried about their own rising loan defaults are decreasing credit limits for customers who don't pay their balances off each month, he said.
Majors, who shops at Goodwill and "always pays her bills on time," closed the Bank of America credit card and opened a new one at $1.1 billion Ascend FCU "where cardholders have a voice in making the rules," Strassmann reported.
In a statement to CBS, Bank of America said it could not comment on a specific customer's account but that it is taking "a more aggressive look at credit cards in the current environment."
Ascend President/CEO Caren Gabriel said Majors' move to the CU helps reinforce the movement's message of differentiation.
"It goes along with our brand promise of educating members so that they become better financial stewards," Gabriel said. "We want to listen to their needs and not just sell them a product."
Gabriel said the credit union has seen an increase in the number of people coming to Ascend to open savings accounts and inquiries from several members on lending safety and soundness. On Dec. 1, it distributed an $8 million bonus dividend to its members.
"On the savings side, people say they're coming to us because they feel comfortable with us. I'm not only proud for Ascend but for the whole movement," Gabriel said of the CBS Evening News mention.
After CBS visited the credit union several weeks ago, Gabriel said staffers kept checking the network's Web site to see when the segment would air. "We almost thought they weren't going to air it," she said.