Seeking Alpha Portfolio App for iPad
Dividends & Income
View FTAX's Comments
Can Citigroup Flail Its Way to Solvency?
It's almost mathematically impossible to pay off a card charging 29%. It is seldom noted that consumer debt interest is paid with after tax dollars. So, it effectively costs someone 50% of a debt - per year - just to keep up with interest. That is what Tony Soprano would call a point (i.e. a percent per week.)
Anyone who could afford to pay off their debt in two years should qualify for favorable terms on the credit lines. With 29% interest, you need a before tax amount equal to your debt every two years just to keep up with the interest.
29% would be an exploitative rate if that were the terms up front. It's criminal when the terms are changed to that. Someone taking on debt at say 10% interest rate, with the ability to pay it off in 5 years, become effectively bankrupt when that rate is arbitrarily raised to 29%
Unless you're in a position to pay large chucks towards principal in addition to interest (which almost no one would be), you need to STOP PAYING any charge card charging more that 15%. Forget your credit rating, you can't afford more debt anyway. In a few months most creditors, including Citibank, will put you on a low interest pay off plan.
On Dec 17 10:09 AM Madacasto wrote:
> why not charge 29% to those dumb enough to pay it? Hot dog vendors
> sell heart attacks in a bun and nobody's condemning them. Those credit
> cards are financial gut busters. At least the "buyers" of the credit
> cards get the details in fine print, or notice of the rate hikes.
> If they don't like it - pay it off and stop borrowing.
Dec 17 01:27 PM
Link to Comment
More on C by FTAX
The Opinion Leaders
Xignite quote data
© 2013 Seeking Alpha