A Tale of Two Industries
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Posted by A Tutorial
(68.106.16.82) on July 09, 2003 at 02:28:43:
A Tale of Two Industries. “Just a taste,” says the friendly dealer. No obligation. So begins the downward spiral. Sure, it feels good. Next time, there’s another freebie. You’ve acquired the taste. But it’s not free anymore. At first the price is reasonable. But soon you need it. Then the price balloons. Now the squeeze play is on. Hmm…, which business is this? Let’s try the credit industry. 0 percent interest for the first 6 months. Can’t beat that deal. Then fixed for life at 9.9%. Been there. As long as your balances aren’t too high, you can always do the wonderful balance transfers to the other “low” rate cards. Then you hit that sweet spot. You’ve used up too much of your available credit. You can’t transfer those balances anymore. Now the squeeze comes. First your fixed rate moves up to 14.9%. Then, when you don’t transfer the balance because there is no place to transfer it to, comes the coup de grace. Something magically changes in your credit report, and you get the infamous, “Your balances to available credit are too high.” You get bumped to 24.9% or even 29.9%. Why? Because they can. Now you can’t even make the minimum payment let alone make any dent in the balance. And to finish you off, come the late fees causing over the limit fees. Nice industry. Next come the goons, wanting to know why you won’t live up to your “obligations.” Really, now. Your obligation was on fixed for life 9.9% accounts, not the 24.9% ones they all popped on you. A $25,000.00 balance at 9.9% is a monthly payment of $500.00 of which $206.25 is interest and $293.75 is principal. $25,000.00 at 23.9% is a monthly payment of $500 of which $497.90 is interest and $2.10 is principal. Above 23.9% and your minimum payment balloons. So what can you do? Well, you may decide that since they unilaterally changed your interest rate, then you may unilaterally change their balance. You may gather all your statements and change the account balances to $0.00.
Why? Because you can.
Executive Compensation
Ron Zebeck $53.5 million in 2000. Metris/Direct Merchants Bank
Sanford Weill $226.0 million in 2000 Citibank
Shailesh Mehta $27.1 million in 2000 Providian
Terrence Murray $18.0 million in 2000 Fleet
James Dimon $33.3 million in 2000 Bank One/First USA
Alfred Lerner $195 million plus $35 million in dividends from MBNA stock worth $3 billion in 2002
Richard Fairbanks $262 million exercisable options at the end of 2001 Capital One
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