First Bank of Delaware - credit card panic during credit crisis

When the major media, pundits, and Wall Street scream about how the mortgage crisis will cause liquidity to dry up and hurt the average citizen, I doubt most thought it might affect them as I just had it affect me.

It’s not that the value of my house has gone down. I’m not in default or danger of default on my mortgage. My business is functioning well and my bills are all paid. But I did run into a problem just this weekend. And it was completely unexpected. And it is directly tied to the credit crunch.

One of my credit cards is Tribute MasterCard. Not a huge name in the credit card market, but just a small card I use for minor purchases. I’ve had a card with them for 2 years. In that time they never increased my credit limit, but they did increase the annual fee.

Now I will tell you a bit about me personally. My business has been going for over 5 years now. My credit rating is excellent, the only debt I have is my home and my credit cards (I have 3). None of my credit cards has been maxed out in the last 4 years at least. I have missed no payments, and had 1 late payment in that time (5 days late to be exact).

I say that so you understand my surprise this weekend. I had car trouble, which I discussed in a different post, and wanted to use this card to handle the situation until I could get home and evaluate which account I wanted to use to pay off the situation. I found out that this card was dead. So I used a separate card and followed up the situation today.

I called the company, and the joy I found as I had no credit, but I did have a balance from use of the card last month. When I got a human on the line, I had the joy of speaking to someone in India. Her English was good, which is not as common as you might think, and she could not say anything more than I no longer was a wanted customer of the company. Which shocked and angered me.

The exact reason as I was told was that I have made a late payment. Not missed a payment, not overdue. I was exactly 5 days late in getting my monthly payment out to the company, a month ago. And that was the only problem that the company has ever had with my account.

Now I have to imagine that things must be pretty bad over at the First Bank of Delaware, which issued the card on behalf of MasterCard International. If I had an account at that bank I would be checking to see how my money was. If I was invested in that bank I’d be calling my broker and the bank to find out how their loan reserves are doing. Because it sounds like they are on the verge of collapsing.

When a credit card company is willing to drop a long-term client, of solid standing, because they have 1 payment that was 5 days late there is a problem. That problem is not me.

I am now rather scared. The fact that a credit card company is that terrified of an open balance that has never been over a couple of hundred dollars in an account that has spent 75% of its activity paid off in 30 days every month troubles me. It means that if even people with excellent credit, and significant histories with a financial company are being shoved to the wayside, there are banks with massive problems out there still.

Now this is no real problem for me. I have 2 other credit cards and I have enough cash to handle my needs. But the fact that this can occur means that I fear what might happen if another card were paid a day late. Or my mortgage. Again I’m not saying not paid, just late.

The financials are in paranoia, if this is any indication. And that paranoia is reaching the smaller companies, which I generally prefer since they are less prone to the risks that large multi-nationals will take to prop up quarterly reports for analysts. This paranoia will not resolve itself in a week or 2. This is something that will take months to work out.

And I can only guess at the repercussions over the holiday season, especially to those with less than perfect credit. Late paying off the Thanksgiving dinner, say goodbye to Christmas shopping. Took a client out to dinner and put the payment in the mail after midnight, so much for that business account. Your mail man was lazy and didn’t pick up your mail as usual, don’t ever have your car breakdown, on a weekend, on a highway in the middle of nowhere.

Suffice to say that I am displeased with the service at Tribute MasterCard and the First Bank of Delaware. I’m sure that no longer doing business with them will only prevent a future problem with them for me. This is a benefit, and there are several dozen other companies looking to provide me cards every week, so the net impact of having them as one of my extra credit cards is negligible.

But if you have a credit card from First Bank of Delaware, or Tribute MasterCard, I’d advise you to switch the account.

And if anyone at First Bank of Delaware would like to discuss this matter on the record I’d be happy to provide my readers with the full interview and transcript.