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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7 comments:
Cayo Dave - I have 2 Citi cards and I also got the opt out notice.
I have seen my interest rate decrease in the past few months - one is now at 7.99%, the other 8.49% so I am wondering why too. I have great credit, have never paid late, pay mine off every month and now this?
If Citi is starting this, who is next - Chase? Capital One? AmEx Blue?
This really is crazy.
The credit card industry is the only business in the United States that has the ability to change the price of something after you have purchased it.
This type if behavior is not beyond Chase or Capital One who have also been accused of unfair changes in terms.
You're right on target, Dave. We gave up credit cards long ago, shifted to debit cards linked to our banks. That used to be free of fees, then the banks began tacking on "service" fees for use of a foreign ATM, and for using the card as debit in supermarkets and elsewhere. The Credit Union told me when I signed up to use the card only in credit mode, or I'd get charged service fees.
After almost being unable to rent a car in Boston last year, we got one card "from" L.L. Bean, actually from a banking company whose name escapes me at the moment. We didn't activate it but continued to get certain legal notices, including the ones you refer to.
Lo and behold! Last month we got a bill for a purchase at a Rite Aid Drugstore in upstate New York, a place we've never been. It was only $47, but of course I challenged it. About thirty days, I got a letter back from them upholding the charge, even sent me a copy of the signed receipt. Uh-oh! Now it's cloned out there somewhere or, horrors, there's a "system" problem where the banking network makes random mistakes.
Meanwhile the solicitations arrive nearly every day, from airlines, merchants, non-profit organizations.
I know someone with several credit cards who gets solicited a couple of times a month to "use the enclosed checks to buy something". And did you ever try to opt out of their solicitations? Impossible.
Maybe we need to return to the days of the Mutual Societies, make our money here, keep it here, spend it here. Then we could hire people to reallyserve us, make it possible for them to afford to live here too.
Everyone else is on their own.
Would we have Utopia then?
This last move will certainly put the last nail in the coffin of the credit card industry. I am sure it will not help the us economy either. It’s like the anti stimulus package. I guess people that have extra money will just pay it, and everyone else will just stop using the cards.
I was a bit surprised by this from Citibank. I have had them for many many years and have always considered Citibank to be the best of the breed. However, I will now use my local bank credit card from here forward.
Yup, got my credit alert this morning, citi raised the interest rate to 24.99% from 10.49%. That put me over limit $10.00 and they hit my credit report with an overlimit notice.
thanks for good advice.
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