Sunday, November 1, 2009
Why 29.99% Interest on Credit Cards?
They're not earning that interest anyway.
Look at the NY Times story on Citigroup:
Of the company’s $1.2 trillion in credit commitments outstanding in the second quarter, $873 billion were credit card lines. A measure of the bank’s efforts to wrestle that problem to the ground is the interest it charges customers: in October, Citigroup raised interest rates on some credit card holders to 29.99 percent.
Here's another take on the same story.
The credit card companies--Capital One especially--book this unpaid interest and fees as income. Their credit card loans are never non performing. They continue to accrue interest and fees until they are charged off. Since the earnings are fiction--why not boost the fictional earnings?
COF calls their junk real estate loans OREO. (Other Real Estate Owned).
And that's the problem with their balance sheets.
They're never black and white.
And that's the problem with the banks and the credit card companies.
Owning them is a bet on extend and pretend; until pretend becomes better.
There are just better places for your money.
If you like fantasy, buy Disney.
Their new move "The Princess and the Frog" is the first hand animated feature film by Disney in six years.
How much competition is that movie going to have?
But maybe old fashioned isn't fashionable on Wall Street.
When stealing and lying is!
Posted by Palmoni at 8:32 PM