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Thursday, July 23, 2009

Citi® Raises My Interest Rate from 8.24% to 14.99%

The APR on my Citi Dividend Platinum Select card is raised from 8.24% variable to 14.99% variableAs a consumer with an 800+ FICO® credit score, I find it very vexing when a credit card bank raises my interest rate to that more suited to a subprime borrower, or someone with a limited or nonexistent credit profile. This has happened with a number of my consumer credit card accounts since the credit crisis peaked last year. In each case, I've opted out of the rate increase, which resulted in each account being closed by the bank.

Though I have the option to opt out of the latest assault on my credit -- an APR increase on my Citi® Dividend Platinum Select card -- I'm not going to. That's because this card has a relatively high credit limit, so closing this account would cause my FICO credit score to drop considerably. Keeping it open will not be a problem, as I haven't carried a balance on this card in years.

Change of Terms Notice

Since I will be accepting the change of terms. My APR will increase from 8.24% variable (Prime + 4.99%) to 14.99% variable (Prime + 8.99%, with a minimum of 14.99%) at the beginning of next month. In other words, in reality, my APR will rise to Prime + 11.74%! Simply outrageous for someone with my credit history. So why didn't Citi just note the change as Prime + 11.74% in the literature they sent me? Very good question. Perhaps it's because they know how uGlY it looks?

I'm betting that two years from now, when the Fed will be raising short-term rates to tame runaway inflation, the rate on this card will be close to 20%, if not higher. Just have a look at where the U.S. Prime Rate was at its most recent high: 8.25% from mid-2006 through September 2007.

8.25% + 11.74% = 19.99%.

Even more telling, let's plug in the median U.S. Prime Rate:

8.75% + 11.74% = 20.49%.

Yikes! Ouch! Just looking a those numbers makes me cringe.

Ok, so here is the reason I was given for the rate increase:

"...In this economic environment in order to continue to provide consumers with access to credit, we have had to adjust our pricing..."
Actually, the way I see it, the rate increase has more to do with the really bad mistakes Citigroup made during the recent housing/credit boom than it does with this recession we're in. Of course, the banks that messed up want consumers and taxpayers to pay for their mistakes, while top executives continue to take home massive bonuses. Seems to be the new American way of doing business on Wall Street.

Citi's excuse is not so bad, however, when compared to the one Advanta gave me when they closed my business credit card account. That bank actually tried to paint me as a credit risk despite my high credit score, perfect payment record and my habit of paying at least three times the minimum amount due each month. Advanta has a lot of small business owners very angry, and I think that lawsuits and settlements are only just beginning for that company.

Ok, here's another quote from the change of terms notice:

"...If you opt out of these changes, you may use your account under the current terms until the end of your current membership year or the expiration date on your card, whichever is later..."
This is actually a much better policy than I've seen with other credit card banks. With other banks, when I opted out of rate increases, the bank either closed my account right away, or closed it within 30 days of my opting out. So, I will give some kudos to Citi for giving customers time to pay down their debt before jacking up their APR.

As soon as I am done posting this blog entry, I will take my Citi® Dividend Platinum Select card out of my wallet, blindfold it, march it down to my crosscut shredder, give it its last cigarette and destroy it. I'll keep a record of the card's details, of course, just in case.

I'm actually grateful that banks like Citi exist. Why? Because my income varies so wildly that my credit union won't give me a credit card, despite my stellar credit rating. So, yeah, I like to complain when they're up to no good, but these banks actually play a vital role in providing credit to folks with undulating income, like me.

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Sunday, July 12, 2009

My Brother Died Without A Will

dying intestateI hate getting surprise letters from lawyers I've never heard of. I got one the other day, from a lawyer in Massachusetts. I took a deep breath (yeah, I really hate these letters) and opened it.

The letter was from a lawyer who is currently representing my brother's wife. We'll call her Jane. My brother -- we'll call him Larry -- died a couple of months ago. He had heart disease. He'd had quadruple bypass surgery years ago after his first heart attack. Back in May of this year, he was sitting at his desk at work, when he suddenly started to complain about pain in his chest. He collapsed, and died before the paramedics arrived. He was a good man and he will be missed by many.

So, back to this letter. It was a "General Assent" document that needed my signature in two places, and I needed to find a witness who would be willing to sign this letter as well. I'm an intelligent guy, but I never went to law school, so I sometimes find legal wording and phrasing somewhat esoteric. I was not able to comprehend what this lawyer wanted from me. The letter might as well have been written in Cantonese. I will now transcribe the important parts of this document:

"...In the mater [sic - I guess this lawyer doesn't check for typos] of the 'Estate of [LARRY]'

I [ME], of [MY TOWN], [MY STATE], being a party interested in the above matter hereby consent to the allowance of the same by the Probate and Family Court for this County and request that the same be granted without further notice..."

In the document, I am asked to sign off on the above statement.


On the same page, but in a separate statement, I am then asked to sign off on this:

"...I [ME], of [MY TOWN], [MY STATE], do hereby release and forever discharge the said 'Estate of LARRY' from all debts and liabilities whatsoever which I now have for or on account of the 'Estate of LARRY' and further consent to the allowance of the Petition-account and appointment described above..."

After reading the letter, I search around the Internet to see if I could find pertinent and instructive information about General Assent matters. I didn't find anything useful. I then called the lawyer who sent the letter and got an answering machine three times. The next day, I tried calling again, and, thankfully, the lawyer who sent the letter answered.

I asked what the letter was about and he explained that the letter was asking me to agree to letting Jane have control of and execute Larry's estate, or, in other words, to agree to make her the executrix of my brother's estate. I was confused as to why this was necessary, since I was certain that my brother had all his estate matters sorted out after his first heart attack. The lawyer then told me the unsettling truth: my brother died without leaving a will, also known as dying intestate.

This revelation was a shock to me because my brother was a financially savvy guy. He would often complain about how our father, who had a decent amount of knowledge regarding money and finance, never took the time to teach his kids about money. He saw this as my dad just being lazy, which vexed Larry quite a bit. It motivated Larry to take financial matters -- big and small -- seriously. So, no will? Doesn't make sense.

OK, so I asked the lawyer why I needed to sign off of this executrix appointment and he explained that all blood relatives must do so. He told me that Jane won't be able to get access to Larry's bank accounts until all the probate stuff had been sorted out.

And that's why it's so important to have a will, especially if your total assets exceed your debts and liabilities. By the time all is said and done, and all the lawyers have been paid, the cost of my brother dying intestate will probably be enormous. Yup. Even if you're under 30 years old and have a net worth of $10,000, make a will, even if it's a simple one. Unless, of course, you like the idea of paying lawyers and judges to make your estate decisions for you when you are gone, and you like the idea of having a significant portion of your estate eaten up by court/legal fees.

Jane and I don't get along at all. Never have. But, of course, that's no reason to hold up this particular legal process. There are two boys involved, my nephews, and both are still at an age where they are relying on Jane financially.

I am hoping that my brother at least had a decent amount of life insurance before he passed.

Now, regarding the General Assent letter: I find it very annoying that Jane's name was not mentioned anywhere in the letter. That's what confused me. Had her name been inserted into the sentences of the above-transcribed statements, logically and appropriately, I would have understood what the document was about. Lawyers! They write documents like this so that non-lawyers have to pay them to decipher the text. Ha! What a racket! What I really don't like is that even if this attorney was a inept ambulance chaser who wrote a bunch of garbage while drinking Jack Daniels with his college buddies, I may not have been able to detect his incompetence. I guess I should have gone to law school!

A special note to lawyers: don't take anything in this post personally. I don't hate lawyers. I have many lawyer friends who I admire and respect. I guess I'm just a bit envious of your power!

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