I am either the best customer of Citibank, or the worst, or both.
You might have learned from Wall Street Journal that big sharks like hedge funds are running the carry trades by borrowing Japanese Yen at almost-zero interest and investing outside of the island country with much higher returns. Similarly, if you regularly read this little blog, you already know from the monthly reviews that your hard-working blogger is also engaging in another type of mini carry trade -- by borrowing at 0% APR from credit card companies, and parking the proceeds to high yield money market accounts that regularly turns in 5% or more a year. At the end of February, I owe a total of $50,000 to three banks. And the most generous? Citibank, which was kind enough to issue two new cards to our family last year, and offered 0% APR balance transfer deals for a total of $36,000.
On the balance, my credit score took a nosedive last summer when I was in the applying-for-new-card-and-get-the-free-money spree, dropping from 720s to 660s in three months. It hasn't improved since, and surely, with a high credit utilization ratio, and barely paying the minimal due, I must be classified as a credit risk by most of my creditors.
Now you never know how life will treat you next. Upon arriving in Seattle earlier this week, I fetched my postal mails and dug out two identical mails from Citi Cards (on two of my cards with balance from 0% APR transfer):
How would you like to be rewarded your credit card company for practicing good credit habits? Now your Citi Card does just that.
Introducing the Citi Cards Payment Partner Program.
For the next 4 months, we will match 10% of the on-time payment you make over the Minimal Amount Due on your Citi Card account. At the end of the program, we will credit your account with everything you've earned - up to $550.
In addition, to help you reach a lower, healthier balance sooner, the ability to charge on your account will be temporarily suspended during the program. Your credit line will also be decreased, so you can manage your account more easily. Please see the back of this letter for more details.
In the illustrative example in the same letter, the math works this way: if your Minimum Amount Due is $100, and you pay $400, you will receive ($400 - $100) * 10% = $30 statement credit for the month. And if you do this repeatedly for four months, you will get a total of $120.
Apparently, the sub-prime mortgage meltdown took a hair cut of Citibank's risk tolerance. So, in this era of financial uncertainty, Citi is more willing to give me, a pseudo sub-prime borrower, enough incentive to unwind the 0% APR carry trade in order to avoid possible delinquency. Nice try!
And you bet I took the time to give two calls to Citi to sign up for this fabulous offer. It is a no-brainer that by paying $11,000 more three months to one-year earlier, I can receive $1,100 in quick cash. It couldn't be much better than that.
P.S. On the technical side, you will have to provide a 10-digit invitation number from the letter to get accepted though, so if you don't have the letter, you might need to work harder to let Citi see you as a credit risk before Citi is willing to give you such last-resort deal. I assume Citi is looking for high balance compared to credit limit, bare minimal monthly payment, and low credit score. Good luck!
