Not a day goes by that I don’t receive in the mail a magnificent offer from one of our nation’s many public spirited enterprises. Today it was a “Citi® Diamond Preferred® Rewards Pre-Approved Application Form” from Citibank, offering their MasterCard at 0% APR on balance transfers together with a $100 gift card after my first purchase. Stuffed in with my congratulatory letter were several other sheets containing information for which I required a magnifying glass. Rather than discard this packet into the circular file as usual, I decided to review it.

After briefly scrutinizing a couple thousand words of unintelligible mumbo jumbo, known in the legalese trade as “boilerplate,” I got to the informative part: What happens if the Pre-Approved customer misses a step along the way? That section was understandable: “All your APRs may increase if you default under any Card Agreement that you have with us because you fail to make a payment to us when due, you exceed your credit line, or you make a payment to us that is not honored. In these circumstances, we may automatically increase your APRs on all balances to the Default APR…currently in effect is 31.74%.”

Let me now shift to the bottom line, as there is nothing else of importance to relate. The only wrinkle of consequence is the magic number assigned as the default rate. You might note that some months ago the magic number was below 30%, the increase no doubt reflecting the recent Federal Reserve rate boosts. If, however, you imagine that rising bank credit card rates somehow translate to a more generous return for depositors, you’d better think again. For those of you unlucky enough to maintain a Bank of America passbook savings account, your return is ½% per annum. Even the money market account I maintain at a comparatively competitive institution is only 3.84%. The days are long gone when banking operated under the rule of three: 3% paid to the depositor; 6% charge on loans for a 3% markup; and at the golf course by 3:00 o’clock. Today the spread is determined by whatever the traffic will bear.

A concluding thought:
It’s an unhappy reality that a substantial portion of our citizens live on plastic and periodically skate too closely to the edge. The entire financial community has become a predatory industry that counts upon human failing to reap unconscionable profits. Try to conduct your life in such a way that you are not a victim.