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CITI's New APR = 30%, They're Toast
I got a nasty letter from Citi Bank recently. They are raising the APR on my credit card to 29.99%.
This
is a losing strategy for Citi. Larry Small, the former Citi CEO built
the bank into a powerhouse by leveraging global consumers. Now they are
stabbing those clients in the back.
I have been doing business
with C for thirty years. I have borrowed from them and paid them back a
number of times. I don’t owe them a penny and I will be closing those
accounts. I don’t want to do business with people who try to put muscle
on me. The end result will be that the only consumers who will do
business with C are those who have no intention to pay back those loans
in the first place. Talk about a bad bank.
The NYS usury law
sets the top rate at 16%. I am sure that Citi’s legal guys have found
an angle around this. No doubt the rules are more favorable in S.
Dakota where this letter originates. I live in NY and last I saw Citi
had its headquarters here. This appears to violate the spirit of the NY
statute. Possibly AG Cuomo will have an answer. I will ask him.
Citi
is owned by the taxpayers as a result of TARP. It is receiving billions
in additional subsidies monthly in the form of zero interest rates from
the Federal Reserve. One would have thought that they might have gotten
the message by now that abusive lending was ‘old school’.
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Actually, no. According to their own terms, they will come bindingly arbitrating.
If you do it the right way, suing isn't gonna do them much good - if, in fact, they find it worthwhile to sue. Normally they'll just beg you pay some percentage of it and be done with it. And it doesn't hurt to have all your bases covered before you default.
No, an agency who bought the debt for 10 cents on the dollar will sue you once you've reached your state's statue of limitations. THEN, you get a lawyer and settle for 1/2 of the original balance. You can even pay them monthly at 0 % interest. Hell of a lot better than running on the 30% treadmill of futility.
Not as entirely off-topic as it may seem:
I know of a construction company that has raised the non-payment art form to the level of a science, at least some years ago.
The company will enter into an agreement to purchase, say, construction materials. Whenever possible, they avoid granting any security interest in anything. All goes smoothly until the items purchased are handed over. Once the purchaser company has possession of the materials, the non-payment fun begins.
They will ignore all dunning letters, phone calls, polite and angry requests.
This continues until a complaint is filed.
They then refuse to accept service of the complaint.
Once the complaint is validly served, they make a settlement offer, usually around $.40 on the dollar, payable immediately by wire transfer of immediately available funds.
The creditor has a valid claim and the debtor has no serious defenses. A contract was signed, the contract was legit, the creditor, vendor, etc. all performed according to the letter and spirit of the agreement.
However the creditor also knows that the debtor will stall the trial and enforcement processes as much as possible, exhaust the appeals procedure, etc.. to the maximum extent permitted by law. The debtor is happy to broadcast this fact.
Faced with a choice of waiting years for its money or getting something now, the creditor usually can be convinced to settle for around $.60 on the dollar.
Of course, the settlement is made subject to an NDA, the creditor agrees not to inform credit bureaux, etc..
Should anyone spout off the (undeniable) fact that the company have engaged in legal robbery, they immediately sue for violation of the NDA.
Obviously, the lender and vendor never do business with this company again, but there are plenty of banks and vendors to defraud.
Thanks to their amazing ability to produce low bids (since their costs are lower than those of honest competitors), this company has (or at least had) plenty of business. The owners of this illustrious construction company are flying around in private jets. I have no clue how they pay for the jets, their pilots or their fuel bill, but all the same, that says a lot about America today.
On the other hand, while my disgust for this company is probably evident, I do not feel the same about stiffing credit card companies or walking away from an upside-down mortgage. In the case of the card companies, I am not entirely sure why.
damn, sounds exactly what i did to ciitbank. :)
I also knew someone who did business that way. It was back in the 80s, and they usually dealt with smaller contractors. This developer would then wait until those small businesses went bankrupt for lack of cash flow. That way he would hopefully not owe them anything. However, I think his son served some time in federal prison (on an unrelated charge).
It doesn't matter what Citi does now; I think they will be dismantled piecemeal over the next few years. This 30% letter is actually a timely warning to the smart customer.
The easiest way to give these guys the finger is simply to not give them your business. Small consumer debt might be a drop in the bucket of their total revenues, but at least you aren't willingly giving them your hard-earned (or ill-gotten, depending) gains in that instance.
It's when the govt gives these crooks taxpayer dollars that we all get screwed.
I got one too. Denninger's got a post about it today too.
It is our duty, wherever possible, to not use credit cards at all.
An interesting pertinent aside--I received a similar leaflet from Wall Street's least insolvent TBTF shell of a former bank, JPM, which said that my Fixed 8.99% APR CC terms have changed to Variable (Prime 3.25% plus 8.74%), lifting 200 BPS overall, effective the billing cycle starting Dec 1, 2009.
I can't wait until the Fed raises the target funds rate in 2030.
well that is one option. another option would be to max it out and not pay them. that will teach them to mess with mother nature....
+1000
+1
No. It is our duty to default on them cards.
Radically default GG
commie. traitor. terrorist.
This is how 100% disabled WAR veterans shop for Ramen & Dinki Di. When you dare to join the 1%ers then I might give a flying fuck about your verbiage or for those your marvelous cynicism refer to.
Truth be known you should use "Killer Angel" as being more appropriate..
Absolutely, Mr. Kendig, absolutely.
Yes, no CC.
+1000