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.