Last month I made the mistake of making a late payment on my business credit card. I don't do such thigs often but because I refuse to allow a bank automated withdrawal access to my bank account it means that I am subject to the very human falibility that is forgetting to pay on time. It should be said that I pay much more than the minimum balance so anyone at the bank that is paying attention would realize that a late payment in a year is not a sign of financial instability on my part. I don't usually discuss my financials here because it's outside the realm of this blog. However, this time I need to share because this time I got a small taste of what credit card companies are doing to millions of people who I am sure are in far worse financial shape than I.
You may recall that the congress, with the backing of some Democrats, passed legislation that unlocked the cap on interest rates a credit card company can charge a customer. With the economy going further into the tank for anyone who is not in the upper management of Fortune 1000 companies or own massive stock in said companies, there are millions of Americans who are charged to the hilt. Admittedly many of them are in the situation they are in because of thier own inability to control themselves. However a large percentage of them are in their situations because of medical emergencies that insurance will not cover or worse the person has no insurance at all.
Today I receieved my statement which had the expected late fee and finance charges. I don't complain about late charges and finance charges. After all if you pay late, then expect there to be consequences that could potentially wipe out the gains made on the last payment. Fair enough. As for finance charges; well that's the name of the game. If you are bright you calculate what those charges will be over the life of that balance and plan accordingly. Is it worth paying $1500 a year to maintain a rolling balance? Is that computer worth x amount in interest of x amount of time? Your choice. If you don't like interest, Credit is not the game for you. however; there had been in the law the agreement that whatever the case, your interest rate would not rise above 26%. Anything above that was deemed criminal. Now thanks to congress (Democrats included) that cap is gone.
Yesterday I discovered that my APR was reset to 32+%. That is unacceptable. Try to plug that percentage rate into many online calculators and you will receive an error that the interest rate is too high! Now fortunately because I am "cheap" as some people would put it, I had the means to stick it right back at Citicorp. I paid off the balances on both the personal and business cards AND called them to cancel the accounts. Unfortunately there are people out there who simply do not have the financial means to make such a move. And they will not hear an 'Account specialist" offer to drop their interest rate to 0%. Yes, oddly enough the consumer arm of Citicorp feels that it should be immune to the dumb decisions made by the business arm of that company.
Many years ago I decided to boycott Shell, BP, Exxon and Amco. I did so due to the situation in Nigeria but my Exxon boycott was a specific reaction to the initial price gouging that has occured at it's stations. While I recognize that all of the companies do such things. My point was that a directed boycott of a single company would send a clear messsage to all companies that such actions would not be tolerated by the consumers. Of course Exxon and BP have gone on to make record profits. While the government is unable or unwilling to put the brakes on such profiteering, you the consumer are very much able to put the brakes on them. Similarly with these banks who are dicking consumers with loan shark rates of interest over a single late payment, the consumer can make a difference should they as a group decide not to tolerate such actions and refuse, when they are able, to do business with those who act in such a manner.
Anyway. I had planned on meeting the new year debt free on my personal finances and continue to let the business "pay to play". However this episode is an example of taking a stumbling block and turning it into an opportunity. Now I am debt free across the board. Now that money they were getting in interest will be going towards the The Olatunji Foundation among other things. Citicorp can kiss my ass. yes I know other banks will do the same thing but this is a start. Below is a letter I sent to Citicorp regarding thier blatant thievery:
I have been a customer of Citibank since 1991 when I got my first card with a $200 credit limit. Since then I have used this line of credit and it has grown tremendously. Over the years I have paid bills in person, by mail as well as online. On occasion, as happens to many consumers I have made late payments. I always fully expected that I would be charged late fees and penalties as that is expected. However, I have never, ever seen what I have seen today. Unfortunately I made a late payment last this month on my Cibibusiness card (though not on my Diamond "preferred" card). I have been running a balance on that card and often make more than the minimum payment. Over the past couple of years you have made a small sum in interest payments and the occasional late fee but that account, nor any of my personal accounts have ever been in default, as in, not paid and referred to a third party for collection. furthermore, I have never been anywhere close to 60 days behind on any payment as when such late payments have been discovered by me the online payment is made before the next statement is even prepared.
Today when I opened my statement I saw that the interest rate on my account was 32%. It seems that you have decided to take full advantage of what I consider to be a criminal form of legislation passed by the Republican Congress, to charge interest above 24% which was the cap prior to the passage of the legislation. Aside from the pure criminality of that legislation, I am further insulted as a nearly 20 year customer of yours to be presented with a clear form of economic blackmail for a late payment.
I am sure you and your stockholders are enjoying the spoils that economic havok that such an interest hike wreaks on millions of your customers that you apparently have a dimm view of. I am very much aware of the income generated by even 1 month of such "sharkery" and I choose not to cooperate. Unlike millions of your other customers, I do have the financial means to clean the slate and not co-operate and I am about to exercise that means.
As of this evening all of my Citibank balances will be paid in full I will be canceling each account and you will recieve not a single cent of interest off me again. Like the Civil Rights movement before, I will not patronize a business, or bank that treats me ill.
No thank you