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?

I didn’t think this was even already in motion, but I’m happy to report that the proposed “Bill of Rights” for credit card-holders (which is almost every adult) passed through the House of Representatives by a huge margin: 312 to 112.

It’s amazing that 112 Representatives would even vote against such a thing, which has no downside that I can see.

Read the whole story at the New York Times.

Last week, I received an official-looking notice in the mail. You know the type: the envelope requires you to tear the perforated edges in a specific order and contains security ink so the contents cannot be seen until opened. There is a return address on the envelope but no business name.

In my experience, the more the envelope looks official, the more likely it is to be junk mail. So I ignored the mail, as I often do, and left it in my incoming “file.” Yesterday, I went through the “file” to make sure I wasn’t missing anything important, and opened this particular envelope.

The notice informed me that Citi was kind enough to increase the credit limit on my primary credit card by a few thousand dollars. I have never approached my credit limit, so I wasn’t sure why they were suddently this generous.

A credit limit increase, if not used, is a good thing for two reasons.

If you spend the same amount with a higher credit limit, your credit utilization ratio decreases. A lower credit utilization ratio could have a positive effect on your credit score. A higher credit score can lead to all sorts of advantages, such as qualifying for a lower mortgage rate.

More credit is available to use in case of emergency. Using a credit card to help you through an emergency is rarely a good suggestion, but having credit available can be part of your overall emergency fund plan. If you need to pay a medical expenese immediately or rent a car in an emergency, credit cards can come in handy. A higher limit provides more flexibility. The goal is to pay as little interest as possible, so credit usage is healthier if you can pay off the balance every month.

Credit cards companies increase limits because they want people to spend more. In today’s economic climate, they don’t want everyone to spend more, only those who they deem to be low-risk consumers. I guess I am part of this group. People like me will help cover the risk the issuers take on by offering credit to more risky individuals.

Unfortunately for the credit card companies, this limit increase won’t encourage me to spend any more than I do currently.

Photo: JCKole

If someone successfully applies for a loan or a credit card using your identity, there will be a big mess to clear up. I don’t want to downplay the hassle, there. I would be extremely annoyed if that happened to me.

However, what we hear on the news and especially in commercials for services like LifeLock (lots of lawsuits) and FreeCreditReport.com (misleading at best) is inundating us with fear that it’s almost a given that it will happen to us. The truth is, financial identity theft becomes less likely to happen to any one person with each passing year. From Wikipedia:

Identity theft complaints as a percentage of all fraud complaints decreased from 2004-2006. The Federal Trade Commission reported that fraud complaints in general were growing faster than ID theft complaints. The findings were similar in two other FTC studies done in 2003 and 2005. In 2003, 4.6 percent of the US population said they were a victim of ID theft. In 2005, that number had dropped to 3.7 percent of the population.

When listening to people tout statistics, keep in mind also that “identity theft” is a broad category that includes financial identity theft. They’re both awful, and I hope it never happens to you, but you don’t have to feel like forking over $10 a month for identity theft protection is necessary. You certainly don’t want to publish any sensitive information in the newspaper like Jeremy Clarkson did, but you should be fine with shredding anything that has, say, a promotion code, or your name already printed on it.

Here’s an excellent resource from the FTC.

And incidentally, why do the FreeCreditReport.com commercials hinge on the fact that if my credit is compromised, I won’t be able to get a good job? What does my credit report have to do with my résumé?

FreeCreditReport.com is the heavily advertised company that offers “free” credit reports (if you sign up for a trial offer for their monitoring service with a monthly fee. They have huge billboards at Shea Stadium, where I will be tomorrow to see the (currently) first-placed Mets.

Keep in mind that the place to get truly free credit reports, three times per year (once from each bureau) as mandated by law is AnnualCreditReport.com. FreeCreditReport.com took clear advantage of the media surrounding the law when it was introduced a few years ago and convinced many people to sign up for “free” credit reports. Many customers feel deceived because they didn’t realize that they were at the wrong website and that they signed up to pay a monthly fee after a trial period.

Lately, FreeCreditReport.com has improved their disclosure, and the company is still a reminder that you should either read and understand all fine print before signing your name to anything or accept the consequences of ignorance.

Nevertheless, if you feel you were duped into signing up for FreeCreditReport.com’s Triple Advantage, you can still request refunds for what you’ve been charged. This is another reminder to check your bank and credit card statements at least once a month so charges like this don’t go unnoticed.

Here is Consumerism Commentary reader akk’s experience with getting refunds from FreeCreditReport.com.

I called this number to cancel my account and get a refund: 877-481-6826. First thing I did was ask for the name of the person I was talking to and her employee ID number. I told her that I wanted to cancel my account and get a full refund. The lady said that she would cancel my account but I could not get a refund.

She said that this automatic subscription is stated clearly on the web site, blah blah blah blah blah. I told her that I wasn’t going to stop until I got a full refund. She then offered me a one month refund. I told her that was great, but again, I am not going to stop until I get a full refund and I wanted to speak with her supervisor. She put me on hold to talk with her supervisor, then voila, I got a full refund.

For me, they weren’t that bad when I actually called. Just don’t let them try to convince you that you do not deserve a full refund. Just keep demanding a full refund and hopefully they will do it.

At this point, FreeCreditReport.com understands they’re in a tight spot and they want to improve their reputation. They may be more willing to provide refunds even if the company is not completely at fault in all cases. From a business perspective, it may be better to provide the refunds now than deal with angry consumer groups.