VISA Credit Card in DEFAULT???

[bigguy]

Does any PERBite have any experience with credit cards in default under the following scenario:

Having entered into a VERBAL agreement to make monthly transfers directly from a bank account to VISA three years ago, a single monthly payment was missed in March. All subsequent payments have been made since without any hiccups. BUT, in June on the IDENTICAL date the regular monthly payment was made, the statement additionally showed a totally unprecedented debit marked as "VISA PAYMENT $100". It appears the BANK honored a "special debit demand" from NCC and the account was debited $100 without any warning or preauthorization by the card holder.

Is VISA legally entitled to make such a demand? Is the Bank required to accept such a demand? Can NCC be forced to return the $100? Was it just a good old "college try" and by making a lot of noise, NCC and the Bank will reverse this debit?

If what transpired is legal, then NCC can in effect make an additional demand any time they wish. Almost a garnishee without the inconvenience of doing so legally.

Any thoughts or experiences, my friend will appreciate. She doesn't want to live in fear that NCC can nab any cash in that bank account any time NCC figures there may be cash available.

bigguy

 

[threepeat]

It's been a while since I've read a credit agreement in its entirety, but I would suspect that somewhere in that massive tome there is a clause that allows this from a legal standpoint. I can also tell you that I read the fine print of my Visa agreement a while ago and it allows them to demand the full outstanding balance at any time (aka balloon payment), so if they can demand full payment at any time, it stands to reason they can also demand a smaller amount at any time too. Banks rarely exercise this clause though, because they don't want to piss off their customers, as well as make the interest income.

However, these are fairly unprecedented times in the credit market, and several credit card companies are taking unprecedented steps to reduce their exposure to both good debt and bad debt. I've heard of banks reducing credit limits for customers who are paying regularly, and American Express is even paying some bad customers $300 to close their account and go away (http://www.npr.org/templates/story/story.php?storyId=101152431). Closer to home, I know CIBC has quietly reduced the cash daily withdrawal limit for ATMs for many, perhaps all, customers.

If your friend has any bargaining power with her bank, ie., she is a customer they want, she might want to call them and raise hell and see what they do. She doesn't have much of a leg to stand on legally, but she can argue it from the standpoint of a pissed of customer who doesn't like the way her bank is treating her.

If I was her, what I would do is go to my bank and cancel the auto-debit payments to Visa, and make all future payments manually. Yes, she'll have to be a little more organized, but at least she will have control over her bank account.

P.S. Actually, before she raises hell with her bank, I just read the article I referenced above, and look at this last paragraph:

"We used to tell consumers, 'Call up, be nice, patient, persistent — and ask for a change,'" Hillebrand says. "I have several consumers who have contacted me and said, 'I called up and said, "Why is this happening to me?" And they raised my rate even more.' I was shocked by that, and I don't shock very easily."

So she might want to think twice about making that call, but it's up to her. It reminds me of that line Darth Vader said to Lando Calrissian: "The bargain has been altered. Pray I don't alter it further."