Twitter
StumbleUpon
Facebook
Delicious
Digg
Newsvine
Google
Yahoo
TechnoratiCiti Raises Rates on Millions of Credit Cards: Report
Published: June 30 2009 23:59 | Last updated: June 30 2009 23:59
![[CitiBank regular and gold bank cards, along with several ATM receipts, are seen in this photo illustration taken in New York, April 9, 2008. (REUTERS/Chip East)
]](http://www.commondreams.org/files/article_images/citigroup-2.jpg "citigroup-2.jpg")
Citigroup has sharply increased interest rates on up to 15m US credit card accounts just months before curbs on such rises come into effect, in a move that could fuel political anger at the treatment of consumers by bailed-out banks.
People close to the situation said that Citi, which is about to cede a 34 per cent stake to the US government as part of its latest rescue, had upped rates on between 13m and 15m credit cards it co-brands with retailers such as Sears.
Citi's rate increases emerged on the day the government proposed legislation to create a new regulator with sweeping powers on consumer protection and a week after the bank was attacked by some politicians for raising employees' salaries.
Holders of co-branded cards who failed to pay their balance in full at the end of the month saw their rates rise by an average 24 per cent - or nearly 3 percentage points - between January and April, according to a Credit Suisse analysis of data from the consultancy Lightspeed Research.
After FT.com broke news of the hike, Citi issued a statement saying: "We have adjusted pricing and card terms for some customers as part of our regular account reviews. This is an ongoing process to ensure we offer terms, interest rates, credit lines and products based on individual needs and risk profiles. These changes also reflect the dramatically higher cost of doing business in our industry as we work to preserve the broad availability of credit."
Citi's move came as the economic downturn caused record defaults among US card users and prompted many issuers to raise rates, both to cushion their losses and pre-empt the new restrictions set to come into effect in February.
However, Citi's increases have been larger than those of its main rivals, according to Lightspeed, which tracks about 12,000 US credit card accounts.
Carolyn Maloney, Democratic representative for New York, the author of the new rules that will sharply constrain lenders' ability to raise rates for risky borrowers, criticised Citi's move. "It's hard to tell if rate hikes on existing balances being put in place now are the result of prior bad business decisions or getting in under the wire of the new law," Ms Maloney told the Financial Times.
11 Comments so far
Show AllWhat a suprise, just when Mom and Pop have to put the cost of the Citi bailout on their Mastercard. Visions of Road Agents dance in my head.
Jeevee
It's best to stick with only one (1) credit card which you know to be honest. One seems to be unavoidable; TWO IS ONE TOO MANY!
My credit rating means nothing to me. For those to whom it matters, I'm sorry for what you have to go through.
any suggestions on this?
I had a citi card.. the rate got jacked up to 30%. ok. I paid that, for over 2 years ( sucked). then I finally did a credit card consumer credit thing.. which I paid for 2 years... then I paid off the balance IN FULL.. but I guess I missed their " due date" .. on a credit card that no longer existed- since cancellation ( which I requested) was part of the program. so then I have a late fee and other penalties racked up.. I now have a collection agency trying to collect FIVE HUNDRED DOLLARS...
I really don't give a damn about my credit rating.. like.. oh yeah.. please i would jump back onto that roller coaster of hell.. ppffft..if the cards weren't covering living expenses during college.. I wouldn't even have had it/ them.
but is there any way to make this go away...?
thanks
I have been using credit cards for over 20 years. The one with an 18 percent rate is paid of every month. I rarely carry a balance on it. I keep a low limit on it and use it for things like fuel or online purchases. (I find this a great way to track spending. If I used cash it harder to track where money goes)
I then have one at 9.9 percent which has been at that rate ever since I got it some 15 years back and one at 6 percent.
My rates have never gone up say the 6 percent one which is tagged to the prime rate banks offer.
I have never ever had an issue with any of the card providers. No surprise rate increases. No shifting of dates for payments.None of these abuses I read about.
Funny, I haven't read about hundreds of thousands of irate Americans, just days before Independence Day, canceling their Citi cards and bank accounts...
Message to the banksters: Thank you, sir - may I have another?
Answer from the banksters: Like you even had to ask...
"saw their rates rise by an average 24 per cent - or nearly 3 percentage points"
stop whining. 3% ?
I had interest on my citi card raised from 9% to 18% back in Feb, even tho i pay them off at the end of every month. The only eason I use Citi credit cards is the cash rewards. Once that goes away, it's goodbye Citi.
Another trick credit card companies pull is to move your due date to an earlier date. If you send payments timed to a paycheck, which I'm guessing most people do, and they change the due date to before your pay date, you start accumlating late fees.
Sioux Rose
KANE: This is the truth, and few have seen it, or it has not hit them yet. It used to be I got my bill at the early part of the month and so long as it made it in THAT month, all was well. Now I get the bill and they want it paid in like 7 days. The "billing cycle" is far less than 30 days! It's just another excuse to tack on late fees and then raise interest rates. Disgusting like everything being done to citizen-consumers as the corporations see their peers getting away with fiscal or literal murder and want to jump on that same bandwagon. I am going to try to pay my CITI card off in the next few months (of course as soon as one gets ahead, the car needs something, or a tooth breaks, or whatever) and be done with it! I finished my Bank of A card. Amen to that one. They were the KINGS of abusing customers for every letter of the law mistep they could conceive of.
Stiff them!
Writing as a former customer of Citibank who's credit rating was trashed over $100.97 in the form of an R9 placed by them on my credit report after saying they wouldn't if I paid up (which I did even though the card was stolen), I find this latest move not all that surprising in the least.
Needless to write, I heartily suggest that any habituate of this site who holds any Citibank credit card, or has an account at any of their banks, join in my boycott of them. They do not deserve anyone's business, as they are truly one of the worst of the bad actors in the US credit card industry.