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Citibank Screwing Credit Counseling Groups With Back Room Offers That Confuse Consumers

Word from inside the credit counseling industry today tells me about a very backhanded and disturbing practice that Citibank is rolling out that seems to scupper the effectiveness that a debt management or credit counseling program might have when it includes a Citibank debt.

This practice will only create uncertainty among people having trouble and leave them confused about their debt management plan.

Here is what sources inside the industry tell me is happening, apparently credit counseling groups are going through all the hurdles to to submit conforming proposals to the creditors of the consumers seeking a debt management plan and Citibank then screws it up.

What Citibank is doing when they get a debt management proposal from the credit counseling agency that conforms to all the terms that Citibank dictates for acceptance, they reject it. Citibank then contacts the consumer directly and offers them a lower interest rate if they will deal with Citibank directly.

While that might sound beneficial to the consumer, what really happens is that it creates a fragmented solution that confuses the consumer/client. The consumer either winds up paying Citibank for some debt and the credit counseling agency for other or they wind up losing confidence in the credit counseling company feeling the agency is not part of a larger solution and not in the loop. The client then decides to cancel the debt management plan because they wonder if they should be on a debt management plan to begin with. The cancellation of the debt management plan then simply dumps the consumer right back where they started, trying to deal with their individual creditors.

The logical claim is that Citibank is doing this solely to cut out what the small amount they pay the credit counseling agency as a fairshare (commission) for collecting the debt and passing it back to Citibank.

In turn for Citibank wanting to save that little bit they wind up creating a fragmented solution that the client is not going to be able to follow through to total debt elimination.

This approach by Citibank appears to be nothing more than an attempt to put themselves first and not participate in a total solution debt management plan that may benefit the consumer. Citibank, you need to rethink that this approach, it sucks.

Citibank Screwing Credit Counseling Groups With Back Room Offers That Confuse Consumers
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About Steve Rhode

Steve Rhode
Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
  • Feelnfroggy274

    Hi Steve,

    You are so right! We offer credit counseling to help get people out of debt and we look at their entire financial situation and come up with something that will work best for them. While some of the individual creditors do try to offer a “special” deal to work with them directly they don’t give as much to the consumer as we can offer. They might drop your interest rate by 3% maybe 4% but I have personally seen rates drop by 10% to 15% when on a DMP!! So anyone that is considering taking the creditor’s offer over a DMP with a reputable company is not thinking it through all the way. If you pay about $200/month to 5 different creditors that is $1000/month and if you accept an offer with one creditor to drop your rate then you are paying $200/month to 4 creditors and $150/month to one creditor which is $950 but when on a DMP you would be paying more like $650-$700/month which could actually leave you extra money to put away in an emergency fund so that you don’t have to use the credit cards!! I’m not saying anyone should trust me just because I work for a credit counseling company…I’m saying ask for yourselves and see what the best option is for you and know that the creditor is out for one thing…to get you to pay them their money!! Credit counseling agencies have limits on what they can charge you in fees and it should always be spelled out in writing BEFORE you sign anything!! And if you aren’t sure…ask!! If you still aren’t sure…DON’T SIGN until you ARE sure! Thanks for doing a great job Steve!!

  • Feelnfroggy274

    Hi Steve,

    You are so right! We offer credit counseling to help get people out of debt and we look at their entire financial situation and come up with something that will work best for them. While some of the individual creditors do try to offer a “special” deal to work with them directly they don’t give as much to the consumer as we can offer. They might drop your interest rate by 3% maybe 4% but I have personally seen rates drop by 10% to 15% when on a DMP!! So anyone that is considering taking the creditor’s offer over a DMP with a reputable company is not thinking it through all the way. If you pay about $200/month to 5 different creditors that is $1000/month and if you accept an offer with one creditor to drop your rate then you are paying $200/month to 4 creditors and $150/month to one creditor which is $950 but when on a DMP you would be paying more like $650-$700/month which could actually leave you extra money to put away in an emergency fund so that you don’t have to use the credit cards!! I’m not saying anyone should trust me just because I work for a credit counseling company…I’m saying ask for yourselves and see what the best option is for you and know that the creditor is out for one thing…to get you to pay them their money!! Credit counseling agencies have limits on what they can charge you in fees and it should always be spelled out in writing BEFORE you sign anything!! And if you aren’t sure…ask!! If you still aren’t sure…DON’T SIGN until you ARE sure! Thanks for doing a great job Steve!!

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