Recovery? How, Given THIS?

[AllentownJake]

This is the sort of thing that, in my opinion, makes meaningful economic recovery impossible.



Here's what it says:

To continue to provide our customers with access to credit, we have had to adjust our pricing.

....

These changes include an increase in the variable APR for purchases to 29.99% and will take effect November 30, 2009.

(It then goes on to say that if you pay on time you can get 10% of your interest charges back, which lowers the effective rate by about 3%.)

I have multiple copies of this letter, all on the same theme - 30% interest rates, vastly higher than they were.

The obvious message in this letter is simple: Those who are responsible and can pay their bills will be subsidizing those who cannot - that is, you, the responsible cardholder, will pay the deadbeat's bill!

Citibank has 92 million cards in circulation and is #4 in market share in terms of purchase volume, with 11.05% of the total.

Overall, consumers hold an average of 5.4 revolving (credit) cards. Half of all undergraduates in college have 4 or more cards.

Average card debt per household, including households that have no cards at all, is $8,329. For households with one or more cards, it is $10,679, both figures at the end of 2008.

Of the 73% of families with credit cards, 60.3% carried a balance. This means that for those with balances, the average balance is nearly $18,000.

If the previous interest rate on those cards was around 20% and is now 29%, the average family with a balance (about 44% of all households) was paying $3,600 in interest charges previously, but now will be paying $5,220, and increase of $1,620 a year or $135.00 a month.

There are approximately 116 million households in the US. As a consequence the decrease in disposable personal income attributable to this sort of interest rate change is approximately $113 billion, or a bit under 1% of GDP.

And that's only the direct cost of the interest. What cannot be measured is the impact on consumer spending that comes from changes in consumer behavior - that is, this is only the interest component of the change in rate.

If this interest rate change prompts people to pay down just 25% of their credit card debt over two year's time the impact on GDP simply from paying down the debt as opposed to holding it level will raise the impact to approximately 1.9% of GDP, or about $270 billion annually in foregone consumer spending.

Good luck with your "recovery" thesis folks.
http://market-ticker.denninger.net/archives/1535-Recovery-How,-Given-THIS.html

[dschis]

1. I got one from Chase

And I didn't even start with them. They bought out my old bank a couple of years ago. Thank the Lord, I don't have a lot there

[JuniperLea]

2. They weren't satisfied by people losing their homes...

They now must make sure that EVERYONE suffers a bad credit rating, so you can't buy a home ever again.

If you cancel the card, your credit report suffers. If you don't use your credit card, they will start charging a fee to keep it open. If you don't charge enough to the card each month, you'll get a fee... the changes are coming fast and furious...

Only the very wealthy were meant to survive this... and unless you make $500 million or more a year, you aren't rich in their eyes.

http://www.lcurve.org/

[AllentownJake]

3. All of these fuckers are leveraged over 30-1

They are fighting for their own survival right now.

[JuniperLea]

4. They gotta keep the greedy gravey train going!

Shame on us for being critical of their need for all our money!

[AllentownJake]

5. Under nomral economic conditions

and if they were the only one in trouble, most of the big banks and a lot of the regional banks would be in receivership by the FDIC.

They are insolvent. They don't want people to borrow money. They want people to make their payments. With real unemployment at around 20%, these blood suckers really don't have much longer unless there is another infusion of federal money.

[JuniperLea]

6. I hate what you just said...

Because I've been thinking it for a while now. They are all squeezing the last drops of blood from all our turnips.

It's all about keeping up appearances on the books. That's why we're still seeing foreclosures months after Obama's plan was set into action. I'm not finding any results, no stories about people who have been helped so far. I don't blame this on Obama, per se. I think the banks are having their way with the bailouts. How long do you suppose before the dollar is worthless? And how does it help all these bastards when the dollar does become worthless? Who benefits?

Maybe my tinfoil is too tight, maybe not.

Things are going to get a hell of a lot worse before they get better. I may be a dewey-eyed dope with impossible hope, but I do hope things will get better... eventually...

[AllentownJake]

8. I don't know

at some point Ben Bernake will have to put the breaks on, on Federal Reserve Money. It literally will be his head if the dollar becomes worthless. I mean, if that would happen, he would die and so would the rest of the Federal Open Market Committee. There would be no place for these guys to hide from the angry mob and the politicians would advocate his public execution just to save their own asses.

Another bailout is impossible politically. There is more TARP money but releasing it is a political death sentence. Getting more money from congress is also a political death sentence for whoever advocates it.

I just read Too big to fail, and these guys aren't an organized group. They are all greedy little fuckers who stab each other whenever they can. They are somewhat united right now because they are sinking but at the end of the day, they fight over who will get a life boat amongst each other pretty damn hard.

Basically, that moral hazard thing everyone talked about has happened. They are under capitalized and their balance sheets are overstated. There will be a new cash crisis sometime next year.

[northernlights]

22. citi sent me a CD investment offer

with a 2% return. Wierd. Tossed it. So you're right -- they're also looking for cash from the "deadbeat" customers like me that they (used to)hate. Fickle bastards, aren't they. Suddenly I'm their bff I guess. :eyes:

I'm prepared for them to go down already with a backup cc at my cu that I haven't activated and an offer for another one that just came from my local bank.

[exboyfil]

7. Citibank has tried to rip me off twice in the last few months

The first was holding a payment and cashing it the next day (you can't tell me it took 7 days to travel within the state via First Class mail). They had a $40 late fee along with the interest (I pay off monthly) for a total of $80. I got it taken off, but how many did not have the backbone to fight back.

The second was when I signed up for an American Express card extension to my Mastercard. It was my understanding that the annual fee which I already paid on the Mastercard would not be charged on the American Express. I specifically asked this question when signing up for the card. Needless the say I got an $85 charge on the first statement. I called and told them that I had a simple solution. I will stop using both cards, and I would pay them whatever I have charged to this point less the $85, and I would have nothing more to do with them ever again. The relented and made good plus a little extra, but I have to wonder how many others just get taken. As for me when the annual fee is up on the MasterCard I am done forever with Citibank.

[HughMoran]

9. They should be ______ for doing this

They are attacking people in a bad time - this is unforgivable and they should be attacked at their homes.

[AllentownJake]

10. They are just trying to survive

They are teetering on the brink of going under. They are way too leveraged and they can't afford to keep loaning money.

[HughMoran]

11. lol

:rofl:

[AllentownJake]

12. Do you disagree with my premise

If there was money at there, they would be loaning it.

[HughMoran]

13. So the credit card companies aren't doing this to get in under the wire

...before new laws governing credit card issuers are enacted (and currently the House is trying to pull in enactment to stop some of this bullshit)?

[Laelth]

14. I got one of those. Citibank is evil. n/t

:dem:

-Laelth

[flyarm]

15. and where the fuck is Obama and the Dems on this....crickets?? is that what i hear?

damn glad i never carry a balance..but for the families that do and those just ahnging on..i feel nothing but pity becayse they believe they were going to get s basket full of hope and change! AND WHAT ARE THEY GETTING?? NADA!!

[cliffordu]

17. You feel that hope and change wasn't delivered because people got fucked

by the credit card companies??

That's a pretty amazing mindset ya got there.

Blame Obama for people fucking themselves with credit cards.

[AllentownJake]

19. Actually

The US Government has a 34% stake in Citigroup and is there biggest shareholder.

[maxpower]

16. Amex did the same to me

Fucking crooks.


Peace,
Max

[Paper Roses]

18. I'm just waiting for B of A to pull this. I'll transfer to my local bank,

already got the OK.
These big guys are cutting their own throats.

[phasma ex machina]

20. +1 on transferring to a local bank. Citi can eat you alive almost as fast as Goldman Sharks. nt

[wuvuj]

21. Simple...

...bail on the card...go to a credit union? They are doing you a favor? They are going down...jump ship....