A Workout Plan That Didn't Trim Her Debt

Jennifer Wright, a loan officer in San Antonio, was unemployed for a time in 2003 when a new job didn't work out. So she wouldn't be late paying on her $7,000 Citibank credit card debt, she called the company to request a workout plan.

Citibank offered her two plans over the next two years under which she would pay $135 a month for six months and then $150 a month for a year. She accepted the plans and was never late, only to be told at the end of the program in early 2005 that she would have to make a payment of $800 in accumulated back interest to bring her account up to date.

"If I had been told I would be charged for all the interest at the end, I wouldn't have agreed to the plan," she says. "They made it sound like they were doing me a favor without telling me they were adding everything up and giving me no break."

She said Citibank told her the $800 had to be paid immediately, or her account would go to collections. And the bank tripled her interest rate, to nearly 30 percent, which brought monthly payments to $400, an amount she would have to struggle to pay, she says.

She filed a complaint with federal regulators, and by April 2005, Citibank reversed more than $100 in interest and over-the-limit fees and put her on a more workable plan that includes a reduced interest rate five percentage points above the prime rate.

Since then, Wright has paid the card on time. She says she has paid Citibank about $8,900 since early 2003, but she has also charged several thousand dollars in new purchases, so she still has a ways to go to retire the debt.

Citigroup spokesman Samuel Wang said that "the vast majority of customers who have entered our payment-arrangement plans have found them to be a helpful opportunity to reduce outstanding debt and rebuild credit standing." He also said that it is a "goal for every Citi representative to clearly explain the terms of the payment arrangement to each customer who enters a program."