If you’ve ever messed up your finances and wanted to make things right, you’ll understand where our reader James was coming from when he wrote on the Credit.com blog:
I’m looking for a little advice. When I was 18 I had either a credit card or a checking account with a major bank that I did not take care of. I understand that I incurred the original debt of $700 and now that I’m a responsible adult I want to get everything from my past (there is plenty) taken care of.
James went on to explain all the problems his youthful recklessness cost him, including a judgment and wage garnishment. Not everyone will have experienced issues as serious as his, but his main question is one that plenty of people can identify with as they try to recover financially from their past mistakes: How do you make up with your bank?
“Be honest,” says Cabot Hart, Group Vice President & Senior Credit Administrator for Gateway Bank. “Let your banker know precisely what happened to cause the situation, and do not deceive or embellish. A good banker is more interested in how to remedy the situation than to hear excuses as to what or who was to blame.” He also recommends being prepared with information that may help toward a resolution, and “if practical, offer some suggestion as to how to resolve the problem.”
How to Make Amends
If the problems were relatively minor or isolated, you may even be able to come out relatively unscathed.
“If it’s an occasional event they will be very understanding,” says Nessa Feddis, a spokeswoman for the American Bankers Association. If you were charged a fee for an overdraft, for example, you may be able to get it refunded. “A lot of time they will waive it if it’s the first time,” she says.
Indeed, a recent Credit.com survey found that 44% of those surveyed said they were able to successfully get a bank fee waived in the past, and of those who were successful, 22% reported the fee they were able to get reversed was for $50 or more.
If your slip-up involved bounced checks or account overdrafts, be sure to ask your financial institution whether it reports that information to Chexystems, Telecheck, Certegy or a similar consumer reporting agency, then order a free copy of your report to see what information appears. If you find a mistake in one of these reports, you can dispute it just as you would dispute an error on your credit reports. If the information is accurate, however, it will generally be reported for five years and can make it more difficult to open a new account with another financial institution.
As with any kind of consumer problems, it’s a good idea to document your efforts to resolve it. If you are talking to someone over the phone, for example, take notes and consider following up important conversations with a written letter or fax noting what was said. And “be available,” says Hart. “Make sure your banker has your current contact information, and multiple ways to reach you such as by cellphone and email.”
For Bigger Problems
If you’ve really created a mess, it may make sense to reach out for help outside the financial institution. According to Cambridge Credit Counseling President and CEO Christopher Viale, a nonprofit agency may be able to help in these situations.
While thousands of consumers have heard of the benefits of the debt management plans that agencies like ours provide, our primary mission is financial literacy education. If a consumer has fallen behind on a bank loan or owes for several overdrafts, the bank will still need to be paid, of course, but they may appreciate the fact that the consumer has enrolled in a financial literacy course to help prevent similar events in the future. It’s a show of good faith. Beyond that, a budgeting or banking basics class will never hurt, and it could save you plenty in fees if your problems are chronic.
Going forward you’ll want to be extra careful not to let it happen again. Take advantage of tools your bank may offer like email or text message account alerts to let you know when your balance falls below a certain amount or you approach the credit limit on your credit card.
“Actions speak louder than words,” says Bankrate.com Senior Financial Analyst Greg McBride. “Making timely payments and not overdrawing your account are the best ways to demonstrate improved financial habits.”