WARNING: Citibank Credit Cards Screwing Over Best Customers

Watch out if you have a Citi Bank (Citi Cards) credit card. The big bank is desperate for money due to losing billions of dollars in the mortgage meltdown.

Citi Bank is raising interest rates it charges to its best cardholders - regardless if they have a perfect payment history, excellent credit score, and have never been late with any creditors.

This month, Citibank inserted a "Notice of Change in Terms and Right to Opt Out" in cardholders' monthly statements.

The notice reads:

"We are increasing your variable APR for purchases. Your purchase APR will equal the U.S. Prime Rate plus 7.99%, with a minimum APR of 13.99%..."

In my case, my Citi Bank card (a Platinum Select from a major brokerage account - this card is supposed to have very favorable rates), will see its interest rate rise from 9.5% to 13.99%. This card has never had a late payment (and I have never been late with any creditor, so this is not a "universal default" issue. Plus, my credit score is very good and has seen no deterioration)

According to a Citi Card supervisor, the move is "widespread" and has nothing to do with your credit history. In her words, "It is a banking decision." The representative expressed embarrassment and said "I don't know why they are doing this".

The notice does allow cardholders to "opt out" of the increased rates - but the account will be closed when the card expires. Though I won't close the account for fear of harming my credit rating, I will never again use it my Citi Bank credit card.

In the past, I have lamented about the predatory credit card industry - with terms equivalent to loan sharking.

And I expressed my real sorrow for those who fall on hard times and are at the mercy of the credit card industry.

Some commenters to this blog blamed the card holders, writing:

"As to credit card issuers being out of control... They aren't. They are operating within the law, and it is rather credit users who exhibit a lack of control."

But in reality, the credit card industry is totally out of control.

Fortunately, there are regulations and new laws being created that will finally reign in some of this abuse (the bills could go much further, but the credit card industry has lobbied and bought off more than a few politicians).

With looming regulation coming, Citi Bank is making one last ditch effort to screw as many people as possible before time is up.

Shame on you Citi Bank.

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No Big Mystery: Still $1000+ Per Sq. Foot & Still Not Selling

In January, the Key West Chronicle blog reported that the Harbor House luxury condominium project was not having much success finding buyers.

The local MLS, at that time, showed 29 of 32 units available and priced at approximately $1000+ per square foot.

Another post questioned if these projects were viable - asking "Will they make it?".

A regular and respected commenter erroneously computed the condo-tel investment potential when he wrote:

"It's my guess that most of these EXCLUSIVE properties have a large exclusivity premium built in and that even if it's necessary to reduce selling prices by 20% (or throw in incentives), there's still a substantial profit in these units, most of which, after all, include a transient rental license that can help to pay the mortgage. The developers talk about these as $500 a night and more rentals. I'll do the math: $500 per night at 80% occupancy = 292 days X $500 = $1,460,000. Take away another 20% for management fees and condominium charges, that leaves a paltry $1,168,000 to cover mortgage and taxes."

The correct math, using his assumptions, would be 292 days x $500 = $146,000. Taking away another 20% for mgmt. fees and condo charges leaves $116,800.

However, Key West hotels are at $500 per night only a few weeks of the year. For the rest of the year, these condos will likely rent for much less. If you hope to hit 80% occupancy, the average rate may be closer to $300 or less. Also, the income a buyer would receive is TAXABLE income - so take another 25% off for that.

Here is the correct math: 292 (80% occupancy) x $300 (per night average) = $87,600. Take away a 20% mgmt/condo fee = $70,080. And remove the 25% taxes = $52,560 in income. That equals $4380 per month - less than half what a mortgage will cost, at 6% with 20% down, on the least expensive unit in the MLS.

And this is if everything goes "right".

Today, over 4 months later - and beyond the traditional real estate selling season - there are still 29 of 32 units available and "active" on the MLS. Amazingly, the prices listed are still stratospheric: $1,965,000 to $3,120,000. The developer, Keys Caribbean, is offering a "Special pre-construction pricing starting at $1,710,000" on their website.

The developer has built a model home that towers over Lazy Way Lane and plans to build more as buyers come forward.

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