Every Tuesday, Smithee presents an article about his own experiences with and observations about credit cards.
Do you have a credit account with Citigroup? I probably do. I think I started one with Rooms To Go when we started paying for our very comfortable bed. They said it would be interest free for however-many months. I figured out how much we’d have to pay per month to make sure we’d never see any interest accrue, but nothing’s set in stone.
For example, despite a pledge made to Congress in 2007, Citigroup is raising its credit card interest rates for many if not all of its customers by 2 or 3 percent. Citigroup has pointed to the “difficult market environment” as the cause for this euphemistically-phrased “repricing.”
Here’s the weird part: in the last four weeks, the average credit card rate has decreased, which doesn’t point to a system-wide difficult environment. Also, since nobody really knows what’s going with the $700B bailout/rescue plan, there’s a fairly good chance that some large part of our taxpayer money might go to rescuing credit card companies.
I’m not much of a conspiracy theorist, but with all of this news appearing in the same seven-day period, it seems to me like the people making decisions aren’t talking to each other very well. That, or Citigroup is taking advantage of otherwise innocent Americans. Oh, there are those contracts we agree to, of course. But in this instance, Citigroup made a pledge to Congress. That should be worth something, don’t you think?
Updated February 10, 2011 and originally published November 18, 2008. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @flexo on Twitter and visit our Facebook page for more updates.
Rank: Quarter
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Just saw on Headline News today 12/18…. they ran a story on this very issue. Thanks News Media!! hope all the outlets pick this up.. and BTW nobody at CitiGroup cared to comment or talk to HNN when the reported questioned this practice….. Others are now calling this issue “Rate Jacking”… You will also be interested to know that as of today 12/18 legislation passed overwhelming in the House of Representatives which would have prohibited “Rate Jacking” is now languishing in the Senate banking committee.
Here’s a thought.. CrediCard companies donate large sums to elected officials campaigns.. then are tipped off about pending legislation that would prohibit them from conducting “Rate Jacking” activities.. so they go ahead and hit us all with a Rate Jacking increase, while simultaneously stalling efforts to get the bill signed. Once signed into law,..the free for all party on the consumer gets much more difficult to pull off.. all the while,….. we the taxpayers are duped into bailing them out…. I gotta say that the timing of all of this…… Rate Jacking, Billion Dollar Bailouts, and no preconditions on how our tax payer dollars get spent by the recipients of our generosity, and pending legislation now stalled in committee smacks of rampant gamesmanship. If it looks like BS, smells like BS, then it most likely is BS…
I received the “letter” also. Score is 740+ across all 3. I have 2 cards, Never been late nor been a “minimum amount” person. 1 with 25,000 limit & carries a balance of several k every month, but I pay large every month, it works for my needs. 2nd card is 0 & has been for 2 years, 15,000 limit.
Card 1 is going from 8.99 to 16.99. Card 2 is unchanged @ 7.99? ???
Here’s the reason for my post though…. Friend with Citi also opted out – currently has a 1,500 balance, just received a call from their customer service saying that because he opted out, they were reducing his credit limit to $250.00!!!! AND that he is now over his credit limit, but as a “courtesy”, if he will pay off his balance NOW, they won’t charge him the over-limit charges…. Looks like they are REALLY looking for anyway to increase their cash flow. He paid the balance off & closed the account, BTW.
After 22 years of pay four times the minimum, never miss a payment, loyalty to Citi, even when their salespeople tried to sell me every product under the sun in an attempt to suck more change from between the cushions of my life, I find that my loyalty will not be rewarded, nor will it be reciprocated. Stop giving me “advantage points” that aren’t worth the screen space they take up and which take years to accrue (10 years to buy a stinking blender) and stop promising me refunds, and just keep my bloody interest rate low.
I have applied for and been given a 7.49% APR Platinum MasterCard which I will transfer my balance to. I will not close my cards out, that would be bad credit card mojo. I will however take them down to a $0.01 balance so that it takes just about a year for them to accrue any interest on it. They can take the interest rate that they doubled on me, from 7.49% to 14.99% and see how much money it makes them with an absolute minimum balance.
I might be able to reconcile myself to small increases over time if I knew that when the current crisis died down that reason and lower rates would prevail. I have a hard time however, knowing that loyalty is being turned against me to help rescue what turns out to be a blood sucking credit card company from ruin. Not only I am I to be gouged by a doubling in interest, but by being beaten mercilessly with taxes that will be used to rescue said credit vampire from a mess created by mismanagement that their other home finance arm helped create. Did I ask them to make the bright decision to irresponsibly push trash loans for more property than people could afford at interest rates with a surprise ending? I think not.
Don’t forget, not all credit companies are experiencing the kind of self-created nightmare that Citi is. As a consumer, it is your right to shop around. The promises that were made earlier about leaving things status quo, were only meant to avert a wholesale panic, not to give you any real assurance of the stability of your credit status. Those promises were intended to salvage some greedy executives’ need to obtain the little bit of your money that is not already his.
Some interesting advice from the American Chronicle
http://www.americanchronicle.com/articles/view/17619
Never missed a payment, but yet my FIXED rate doubled on Citi. I am going to transfer every balance I have with this
company and I hope THEY SINK!
BETH: Wow are u so right. Let me know where to are taking your business, I’m right behind you.
Warren
What’s interesting is that they more than doubled my rate from 6.74% to 14.99, told me there was no reason – just couldn’t afford to offer that rate. Then I closed the account.
Then last week, just to see what would happen, I applied for a Citi Card that they advertised with a 6.74 rate – I got it.
These people have no shame!
Phyllis, I’m assuming Citibanks terms on your new card state they can change the terms at any time for any reason? Do the terms include the right to opt-out, if they raise your rates on this card?
I just noticed my interest rate went up this month by 3 points, I called citibank and asked for an explanation. They explained that becaue of the economy we had to raise our rates and that I was sent a letter informing me of this, so if I didn’t want my rate increased they wouldn’t raise the rate but when my card expired I could no longer use it. then they also gave me another option since I wasn’t to happy and was just going to go with closing the card. They said they could lower the card but not back to what it was and wave this months interest rate and this way I could still use the card after the experation date. I went with that plan but am thinking of cancleing it in the future, my chase card has a single digit rate and I was even late with a payment on that card last month.
Like most people who have posted on this website, I have always paid on time and paid above the min payment every month on ALL my credit cards. This month I almost had a heart attack when i saw that my 6.99% interest rate was raised to 11.99%. I was beside myself because I know that I had not missed a payment because I am on automatic payments plus I plug in manually online an additional $50 or so each month. I called customer service and asked what was going on, and I was feed the same line that everyone else about the economy. I explained to the customer rep that I refused to be punished by their careless planing and if they could not bring the rate back down i was dis enrolling in automatic payments and they were not getting a payment period. i was placed on hold and was later told that they would bring the interest rate to 8.99% and that was the best they could do. I kindly replied, being sarcastic, that they can put it back to 6.99% because in the same January statement the fools included 6.99% checks. Don’t tell me that you cant because you can!!! i was put on hold another time. she comes back and tell me that they are putting it back to 6.99% but I am still liable for the interest. Guess again. i requested to speak to a manager and when i did not hold back anything. i asked what kind of message are you sending to people who are in good faith paying their cards on time when there are people filling bankruptcy for whatever reason. why punish those who are honestly trying to do the right thing? I got both names and ID numbers as well as a case number to the manger who put the rate back to 6.99% and credited me the finance charge. I wish everyone good luck!
I just wanted to add another example of what Citi can do if you call them. The rate on my Citi VISA card went from 13.99 to 24.99. I called yesterday, 1/25/09, to see why the increase. The call rep said it was just a business decision unrelated to anything specific about my profile. The call rep only wanted to know if I wanted to opt out. He didn’t offer anything in the way of a slightly improved interest rate or anything else. I wanted to do some research and see what the ramifications of opting out were. I called back this evening and asked to opt out. The call rep I got this evening, without any prompting from me, offered to issue me a Citi MasterCard with a rate of 9.24%, transfer my current large balance to that card with no transfer fees or annual fees, and give me a discount on my current bill to bring it back to what it would have been if my interest rate had never changed. I took the deal. I know there could be trouble in the fine print , but it seemed a good alternative and so I wanted to get word out to people that this option is possible. Call Citi and be polite but firm about your intention to opt out, and see what they have to offer. If you do end up opting out it’s not a bad deal. You get to continue with your pre-change card rate, you get to use the card until its expiration date, and after that you can no longer use the card but you can continue to make monthly payments under your old interest rate and minimum payment levels.
The interest rate on my Citibank credit card jumped from 6.9% to 14.9% in one month. I have impeccable credit, no late payments. I promptly paid the balance on the card, when I noticed the interest rate increase. When I asked customer service why my rate jumped, this is the response I got:
“Our records indicate your interest rate increased due to a change in your account terms. You were sent notification of the change in terms in November,2008. If you do not wish to accept the new terms, please reply to this message.”
Amen brother! I’ve been notified by one card holder than my interest rate is doubling. I’m so mad I could spit and to top it off, that is probably just the first one. Every (democratic) congressman and senator should lose their job over this one! Just who are they trying to help? They are making things worse for the common man and fattening the pockets of the companies that caused the mess in the first place. It would have been a great plan to pay down the credit and mortgages instead of just handing the money over to the wolves.
What are you talking about dumocrats? They are and were always the problem. They are to blame for the folks who should not have been able to buy homes yet got approved because the DUMOCRATS wanted them to have homes even though they were not qualified. And now Mister CHANGE that everyone thought was so great is throwing Monopoly money into our economy and essentially making your hard earned dollar(if you work) worth 10 cents so in return it will make you have to spend more money on items because of the influx of monopoly money that was no where to be found which makes our dollar worthless.
I was also one of Citi Banks best customers. No Longer. The reason they are raising rates on their best clients is because they are desperate for cash. What happens to most good customers who have balances when they raise rates? They will pay it off or transfer the balance to a new card who accepts the new balance and pays Citi off. Either way they get the cash. It is will be a long term loss for them as they are losing good customers but they are getting a big intake of cash in a short term to try and off set the losses they are having.
So I just got the letter from citi advantage telling me that because I opted out, they won’t renew at the end of next month. I called them and they said they don’t have any better rates even though I have impeccable credit and have never missed a payment and used my card for business expenses last year to the tune of over $60K in travel costs. But apparently they don’t find my business important. I just applied for the Discover card and got approved at the lowest rate (11.9), and gives me 2 miles for each dollar. Same yearly fee as citibank was. I wonder when they will get it, that those of us who have good credit and actually provide good income at low risk to them should be treated like gods in this day and age. oh well.. cya citi will be my new moto!
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