Citibank announced yesterday that it is raising the rates that approximately 20% of their credit customers pay on outstanding balances. They expect the rate increase to be on average 3%. The WSJ reported that (sub required):
""The industry has recently experienced an unprecedented market cycle with severe funding dislocation and significant consumer credit deterioration driven by the mortgage crisis and rising unemployment. In light of these unprecedented developments and others, Citi will be repricing a group of customers in our Citi-branded consumer credit-card business in the U.S. to appropriately manage these risks," said John Carey, chief administrative officer of the credit-card unit.
Citigroup's move follows a similar change by American Express Co., which is raising rates to some customers by two to three percentage points. Raising rates on customers is a delicate dance for credit-card companies. While the firms want to pull in more revenue from customers who carry a balance from month to month, they don't want to tip those customers into default because that hurts the card issuer's bottom line.
Customers can opt out of the rate increase. Those who do are permitted to use the card at the old rate until it expires."
Citibank is not alone. Last month Amex raised rates on several of its customers by 2 to 3 percentage points. Nordstrom also summarily raised rates on all of its 2 MM customers.
All of this makes you wonder though. Isn't this the exact opposite of what the TARP was supposed to accomplish? Wasn't the idea to loosen lending and lower rates?
It also makes me wonder when a smart bank is going to come along with a lower rate and take all of of the impaired banks customers. There are relatively healthy banks out there and if they have capital, which they should, they could have a field day. Raising rates in a recessionary environment when the Fed Funds Rate is close to 0% doesn't seem like a great long term business strategy.
Comments
Bernie Sanders claims corporate scum should be arrested
February 04, 2009
Just received my notice , increase to 25.9% on a Home Depot card ie Citibank , late once in 13 years . Built three homes , spent tens of thousands of dollars .That should keep the customer coming back .
Citi just received 45 billion of bail out cash and thats the thanks we get .Soon they will be in the street begging .They need the 400 million to name yankee / citi stadium .What a bunch of morons.
Paying mine off ASAP , less interest they make off of me ,the better .Corporate America cutting their own throats.How sweet!
Is this review helpful? Yes:0 / No: 0
Amanda
February 06, 2009
I just received a notice from Citibank (Home Depot credit card) raising my interest rate to 26.99%, this is insane! I have never ever been late and have made more then the minimum payment. Honestly I feel like leaving this country and all the debt behind, it is just not worth it anymore being an American. I don't mind paying interest but this is just plain robbery. The little people are getting screwed all the way around in this country....enough is enough already!
Is this review helpful? Yes:0 / No: 0
Diane
February 06, 2009
This happened to me with CitiBank and now today I get a notice from Chase that they are doing the same thing. The notice said if you choose not to accept the new APR you can write a letter stating so and my rate will remain the same, however, the account will be closed (of course I have to pay the balance.) This is what i am doing - unbelieveable. Good thing we bailed these idiots out! BTW, I've never been late on any payment and I have an excellent credit rating!
Is this review helpful? Yes:0 / No: 0
Joe
February 06, 2009
They used to have a word for this sort of thing. Usery. Like a lot of other people, Ive had a good credit score (810), always paid off purchases quickly, (usually withing 3-5 months) never missed or been late on a payment, etc., etc. only to see the rate on my Capital One card raised to 29.4% in the mailing I received today. Thats the tipping point for me, Im done. I just dont give a rats *** about it anymore. What good is a good credit score if A) those with the money wont lend it out and B)they want to charge more than the legbreakers down at the pool hall want for it?
The American public have built an economy on the flimsiest house of cards (pun intended) possible and one of the bottom ones (the housing market) has been pulled. Watch how it all comes crashing down.
Is this review helpful? Yes:0 / No: 0
sue
February 06, 2009
I've had a citibank credit card since 1984! I have never carried a balance and have never been late on a payment. In fact, I've never been late on any payment on any bill in my entire life! My credit is stellar, yet Citibank just raised my interest rate to 19%. I called furious saying they were treating me like a deadbeat. I was given a bunch of b.s. reasons.
I hope they go under. What a horrible company.
Is this review helpful? Yes:0 / No: 0
Traci
February 09, 2009
I agree with what everyone is saying, I get my bill and the payment was higher, I knew I did not charge anything, I then looked at my interest rate and seen that it went from 6.99% to 14.99%. I called and the only option I had was to opt out and have the card closed when it expired.
This is totally unfair to the people that are working and paying their bills. I know in my household I am the only one working and trying to keep things afloat. If I have to make a choice at some point as to which bills I can afford to pay and not to pay, I will guarantee the first one I will not pay would be the CITI card. If it is going to hurt my credit score with closing the card, I can rebuild it again if I don't make regular payments.
There should be a class action suit agains CITI cards. This is an unfair practice.
Is this review helpful? Yes:0 / No: 0
Michael Branco
February 12, 2009
Click on the link below to fight back!
https://secure.consumersunion.org/site/Advocacy?cmd=display&page=UserAction&id=1997
Is this review helpful? Yes:0 / No: 0
Ed G
February 13, 2009
Yup same comments as above! Citibank and Vikram (Panning-for-bailout-money) Pandit jacked the rate up on my Home Depot CC from 22.99 to 25.99%! I have excellent credit and never missed any payments! I will be getting on the Home Depot website and will send
them a scathing email about Citibank raising the interest rates on their CC and will let them know I will no longer be using their credit card!
Is this review helpful? Yes:0 / No: 0
Gouged by HD/Citibank
February 14, 2009
Home Depot said they are lowering rates to their better customers (credit risk). They have a new four tier rating
17.99%
21.99%
25.99%
26.99%
Why than are the best customers having their rates increased. I checked my credit & FICO score and have the top tier(720-850) "Excellent" credit, but HD/Citibank rates me as scum at 25.99%.
The average FICO score of their active private label credit card is 672. 30% of all sales of Home Depot are on their credit card.
I am not shopping their ever again. It makes me sick that they tell me I deserve 25.99%
Is this review helpful? Yes:0 / No: 0
Citi No more~~
February 17, 2009
I was also told they were raising everyones rate to 24.99 % and what is really funny I received a questionnaire by e-mail asking several questions about their service, I was polite and diligent in telling them why they are about to loose many many customers they make a lot of money off of
I have always made about 3 times the min payment, and have never even come close to being late on any or our loan payments, I pulled my reports just to see what was going on,
be warned citi is not the only one making drastic changes, I even had one so far that lowered my limit to my balance!
I'm done, every card that pulls this with us I will close with a letter telling them why
Is this review helpful? Yes:0 / No: 0
Add your Comment
or use your BestCashCow account