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Wednesday, June 26, 2013

Exit Strategies: How to Leave Financially Abusive Relationships

Have you (or someone you know) ever been caught up in a financially abusive relationship and desperately needed an exit strategy? I have.

There are many consumers that are in financially abusive relationships with financial institutions that seem to be “not that into” them. They are dealing with ridiculously high loan interest rates, very low deposit rates, too many and extremely high fees, as well as poor customer service.
Being in a financially abusive relationship not only angered ME, but it made me feel weak and hopeless because I didn’t know how or if I could escape.  Then one day … I did!  So, here are a few effective Exit Strategies for getting out of a Financially Abusive Relationship.
Talk About It
There may be an opportunity of improving the situation by talking with the right person at the financial institution. So, before deciding to break up with the financial institution …
Be sure to
  1. Share concerns with a Customer Service Representative,
  2. Speak with a Branch or Department Manager about concerns for resolution, or
  3. Write a letter to the Senior or Executive manager about concerns.
If efforts to resolve the matter are not addressed appropriately or ignored, move to the next strategy.
Start Financial Dating
Begin the process of financially dating other financial institutions to find one (or two) that can meet, at least, most of the required financial needs (deposit accounts, loans, internet banking, etc.). In my book Financial Fornication, I share the 5 phases of Financial Dating to avoid financially abusive relationships. These phases should not be skipped.  It is necessary and worth taking the time to get to know financial institutions to ensure they are right for a particular financial situation.
So, be sure to
  1. Explore financial options (banks vs. credit unions).
  2. Investigate the financial institution(s) selected via the internet or word of mouth (research).
  3. Experience the Introduction by going to the branch(es) or calling customer service to ask questions.
  4. Start slow Courting by using one or two of their financial services (open a savings or checking account), when ready!
  5. After all 4 phases have been executed, Commit to the new primary financial institution (PFI) by using more of their products and services. 
Once a new financial “main squeeze” is found, it will make it easier to leave an existing financially abusive relationship.
Exit Slowly & Deliberately
Whether a new financial “main squeeze” is on standby or not, another Exit Strategy is to slowly stop using the financial institution’s products and services.
Be sure to
  1. Review bank statements carefully to identify all direct deposit or automatic payments coming out of the accounts.
  2. Stop or change automatic payments from the account(s) and update payment information with the new financial account information, if available.
  3. Ensure that all accounts are in good standing or current. This will ensure a clean break. The last thing wanted is a reason for the abusive financial institution to remain in contact.
  4. If possible or necessary, refinance loans to the new financial “main squeeze.” If this is not possible, keep this in mind … having loans with a financial institution is like having a child(ren) with an estranged spouse or mate.  Leaving the relationship does not diminish the responsibility of the child(ren). Therefore, leaving the financial institutions does not diminish the legal responsibility of the credit obligation.  If refinancing is not an option, continue to make loan payments to the financial institution on time until it is paid in full to avoid collection and credit report drama.
  5. Lastly, stop or reduce direct deposit into the account.
Once these steps are executed, a clean break is relatively available.
Even though the financial relationship may seem extremely challenging right now, just know that all financial institutions are not alike. There are lots of really good financial institutions out there that value and appreciate their customers.  Once you find them, some of them even provide an easier method of transiting automatic payments and direct deposits to them through what is called Switch Kits.
So don’t give up. There is hope. And most importantly, you deserve better!
Financially True,
Tarra Jackson, Making Money Sexy!