I Thought We Were in the Middle of a Credit Crisis?

I was under the mistaken impression that credit was getting scarce in the U.S. credit market. I have mistakenly believed the news when they say that we're at a point where free money is over and credit will be more difficult to obtain.

I'm not sure if this supports this or disproves this, but I got an email from American Express to pimp out my friend's email address in an effort to earn $25. The email reads:

“Show your friends what Blue Cash from American Express can do for them, and you can earn a $25 Statement Credit for each friend approved. “

So let me get this right - The credit industry is in shambles and my credit card issuer wants to pay me money to solicit more people to get more credit - just in time for Christmas? Isn’t this how we got here in the first place?

BTW – Don’t be surprised to get an email from me asking you to sign up for an Amex card – but it’s completely unrelated to this…

Dealing with a Credit Union – I couldn't make this stuff up

I just had to chronicle my experience with the State Department Federal credit Union. These guys were just goofy…

When I went to get a motorcycle loan I checked out their rates (admittedly this was at the beginning of the credit crunch). I saw they offered a new loan rate of 4% which was way under the others I was looking at – so I decided to go with them (blindly assuming of course they would give me a loan). Of course in order to apply for a loan, you have to be a member.

So I called the Credit Union while I was surfing their site and I was connected to a nice lady who asked me “What makes you think that you can be a member?” Fair enough question I guess – so I answered that I was a military person stationed at an embassy overseas. She put me on hold for two minutes and came back to say the only way a military member can join the SDFCU is if they were stationed on Fort McNair (DC). When I pointed out to her that on their website it specifically states an eligible category is "U.S. military employees assigned to a U.S. Embassy overseas" the line went silent... Then she said I should probably go ahead and register on the website because she couldn't help me.

Maybe at this point I should have run screaming.

So I applied online - but it wasn't that easy. Even though they took my $99 as an initial deposit - they said I had to wait 24 hours for the account to be created before I could even apply for a loan... Is this one of the reasons that banks fail?

That was 15 October when they took my money. I called 16 October and she said – it would take more time. I got distracted and didn’t call back until the 27th of October – They told me my account would be established that day. The next day I called back and said I wanted my money back – They apologized again and that night I got a personal email from some supervisor with his apologies. The next day I had an approved account, so I finally applied for that loan. In those two weeks that I was waiting, their loan rates had gone up by 1% so now that same loan was going to cost me 5% vice 4%. Of course…

So I applied for the loan and submitted it. To my surprise they got back to me the next day. They had tentatively approved the loan, but wanted me to provide the following additional information (pasted exactly):

1. PURCHASE ORDER.
2. LOAN APPLICATION AND OPEN END AGREEMENT.
3. ACCEPTABLE INCOME DOCUMENTATION.
3. Verify approximate term of 24, 36, 48, or 60 months (72- or 84-month car loans are available with a minimum sticker or retail value of $25,000 at a higher annual percentage rate). There are no prepayment penalties.
4. DISBURSEMENT INSTRUCTIONS.
5. AUTOMOBILE INSURANCE INFORMATION
6. WE NEED TO KNOW THE REASON FOR THE 5 INQUIRIES ON THE CREDIT REPORT IN THE PAST 6 MONTHS.

Most of the above is standard – I did wonder why they used the number three twice (and why the second number three only got lower case billing) and then I started to wonder who purchases insurance first and then goes out shopping for a vehicle and if it was my income that had to be acceptable, or just the proof of income that needed to be acceptable. So many questions...

The oddest request was number six (really seven but who’s counting). Ignoring that this woman was ‘yelling’ at me by using all caps but her note really made me want to reply with:

“Dear Ms. X: The reason that you see five different credit inquiries is that I decided to shop around for an auto loan instead of taking the first offer I received. You see – I am not a moron.” But I didn’t. I sent the information back and assumed they would mail a check the next day or so. Then the next day I got this email back:

“Good Afternoon,

Prior to disbursement we normally require a VIN (Vehicle Identification Number) for the vehicle we are financing. We will make an exception in this case as long as you agree to be responsible for the payments even though you do not have possession of the vehicle at this time and you will provide us with the VIN# as soon as possible.”

Holy crap!! My social security number and my signature on the loan paperwork wasn’t good enough – now I have to make a pinkie promise, via email, that I’ll be responsible for paying back the loan?!? Seriously – This has to be the reason banks are going under – forget the contracts and just send us an email saying that you swear to pay us back, okay??

At first I thought they might talk to all their clients like this, then it dawned on me they might think they need to talk a little slower because I’m military and not State Department… Oh yeah - I went there.

So they did finally mail out the check – and yes, keeping with my email promise I even began to repay them, but last week I received the quaintest little package via snail mail – They sent me a payment booklet. You know – a little stapled booklet (like the kind my son makes in art class) with 12 pieces of paper that lets me record the check number and the date I mailed the check to the bank. It even had the due dates for the next 12 months so I wouldn’t forget.

I now firmly believe that the payment booklet is the reason that banks are going out of business. In the year 2008, this antiquated Credit Union printed and mailed a personalized booklet to me - halfway across the planet - so that I would remember to make my payments on-time. They might as well have pinned my mittens to my jacket! The time and effort to do such a thing, multiplied by the thousands of customers they have must be an extraordinarily unnecessary cost. I haven’t written a paper check to anyone but the embassy cashier in the last three years and neither have a lot of people I know. If you as a banking institution, are not setting yourself up for direct deposits...

This was way longer than I expected – and I’m ragging on them pretty hard, but I feel like I’m dealing with a Mom and Pop shop that sells licorice in the back next to the soda machine. I’m amused if nothing else – and they're not all bad -The do have a fancy internet site and everything.