11/14/2012 03:02 pm ET

Hurricane Sandy Victims Face Credit Uncertainty Due To Banks' Opaque Policies

Karen Sposato is one of the lucky homeowners in Breezy Point, N.Y., a community ravaged by Hurricane Sandy and the devastating fires that followed -- her home is still standing.

Now disaster clean-up looms. Sposato and her husband will not be able to return to their flood-damaged home for months. During the storm, the entire first floor of their home was under two feet of water. And over the past two weeks, added to that initial shock have been the high-cost bills: Deposit and rent for a new, temporary apartment and a $10,000 advance for construction work on their home to prevent mold from growing. Not to mention the cost to replace all their belongings down the road.

Sposato looked to the obvious place to get quick cash to cover these sudden storm-related expenses: her credit cards. She wanted to increase the line of credit on her Capital One credit card to ensure she could cover upcoming bills, while conserving some cash on hand for other emergencies. The card was not yet maxed out, but Sposato wanted to make sure she had available credit for the slew of expenses.

But when Sposato asked Capital One to extend her credit line to $20,000 from $15,000, the answer was no. When she pressed the bank, it offered to send an explanation to an address that barely exists now, but the immediate response through its online customer-service application was that she was ineligible.

"We have been thrown into a pit of financial uncertainty," Sposato, who is the comptroller for a national theater group, said in a phone call with The Huffington Post on Monday. Her neighborhood of Breezy Point was declared a national disaster zone, where more than 80 homes in the area burned to the ground following the late-October superstorm.

Capital One would not comment about Sposato's specific case, but Pam Girardo, a spokeswoman for the bank, said that customers should contact the bank individually and that decisions are being made on a case-by-case basis. The bank features an emergency banner on its front page that directs storm-affected customers to contact the bank to discuss financial assistance but does not offer specific details.

"We want to work with customers dealing with hardship situations due to the storm," said Girardo.

Last week, Bloomberg reported that Capital One said 18 percent of its loans are to consumers and businesses in New York, New Jersey and Connecticut, and that the financial group could face higher losses due to Hurricane Sandy.

Banks and financial institutions responded quickly to Hurricane Sandy in their marketing materials, offering fee waivers and the promise of financial assistance for millions of customers affected by the storm.

Chase, Citibank and Bank of America announced that customers could request credit increases for help with storm-related costs, though in most cases banks also said customers needed to be eligible without specifying further details. Charter One also is advertising emergency loans up to $10,000 for eligible customers.

But when it comes to credit card lending, customers are on their own to plead their cases. Creditors "may intimate that they have people's back, but ... there is a big difference from saying 'we will work with someone' to 'here is our poster policy,'" said Steven Burman, president of New York-based Credit Advocates, a nonprofit credit counseling and management company.

The Federal Emergency Management Agency offers some immediate financial aid to affected residents, but for many who are waiting for an insurance settlement, credit cards act as a kind of bridge loan. As of Monday, Sposato was still waiting for the insurance adjuster to view her home.

Sposato has had to take other emergency financial measures, including dipping into her retirement savings and maxing out her other credit card, an American Express. Sposato did not make a request to American Express to extend her credit limit.

"We have just been thrust into this area of unknown," she said. "We don't know where we are going to get the money to fix the house."

Have you been denied an increase in credit following Hurricane Sandy? Please contact or leave a comment below.

Hurricane Sandy