Citibank 'thanks' America with notices to its cardholders of a new and usurious policy

http://thenewyorkcrank.blogspot.com/2008/11/citibank-thanks-...

Citibank thanks America for filling its begging bowl with a royal one finger salute. And Congress snores when it should regulate interest rates

Talk about biting the hand that feeds you!

Last week, while Congress was engineering a bailout package of the taxpayers’ money to rescue Citibank and save the economy, Citibank was sending out notices to its cardholders of a new and usurious policy — a policy that could drown consumers and help sink the economy.

Louie the leg-breaker
is now a Citibanker

Usury is nothing new to bankers who issue credit cards. For example?

While banks, on average, were paying their customers 1.25% on interest checking and 2.40% on money market accounts, they were charging credit card holders an average of 11.27% overall to borrow the same money. That's according to this morning’s Bankrate.com. And that’s just the average.

Those are the kinds of rates that used to get loan sharks from the Bonano family put away for 10 to 20 years in Sing Sing. But it’s worse than that.

According to a “Notice of Change in Terms and Right to Opt Out,” set in hard-to-read, tightly spaced mouse type that Citibank mailed out last week:

All of your APRs may increase if you default under the Card Agreeement that you have with us because you fail to make a payment to us when due (even though we may have waived the late fee), you exceed your credit line, or you make a payment to us that is not honored.

Increase to how much, pray tell? Why, to a rate that would make a mafia collector like Louie The Leg Breaker blush.

In these circumstances, we may automatically increase your APRs (including any promotional APRs) on all balances to the Default APR, which equals the Prime Rate plus up to 23.99% or up to 29.00%, whichever is greater.

The math of Citibank
arm-twisting

Twenty-nine percent? Twenty-nine percent!! Do the math (which you can do with the interest rate calculators at Bankrate.com.) At that rate, if you were $5,000 in the hole and gave the vig collectors at Citibank or any credit card company $128 a month to pay down the loan, it would take you ten years and cost you over $15,000 clear your debt.

Remember, this isn't a trap Citibank has set for the rich. This is entrapment of the poor and desperate.

Round up the usual victims
of banking greed

Who’s likely to run into a default problem and get socked with Citibank Mafia rates? Why, people in financial trouble. People who lost their jobs thanks to the meltdown caused by the banking industry's own irresponsible practices. People who are sick and have no medical insurance. Or people who went a few bucks over their credit limit, by accident or due to unavoidable emergency.

Nevermind knowledgeable financial commentators pointing out that Citibank’s terms (the bank will have to pay between 5% and 8% for its “screwup money” compared to the 29% Citibank wants you to pay for screwing up) are “too lenient.”

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