If you want credit card horror stories, you can find them all over the Smart Balance Transfers blog. Beginning last November, visitors started writing me with increasingly horrific tales of credit card companies gone wild. Of all the stories I’ve heard, none have bothered me as much as the recent reports of interest rate increases by Citibank that have left what seems like millions of customers with two options: close your credit card account or pay 29.99% interest.
Prior to the credit crunch, the majority of credit card complaints revolved around unfair penalties, most of which were clearly outlined in the terms and conditions of the affected party’s credit card contract. During the credit crisis, the nature of these horror stories changed. Rates were being sharply increased, credit limits were being cut, and accounts were being closed with no warning.
Ultimately, however, the horror stories that haunt me the most are the recent ones from Citibank credit card customers. These customers have tended to have very good credit and long histories with Citibank. Here is a prime example:
“I received the same 29.99% interest rate increase today and was shocked, to say the least. I have been a loyal customer for nearly 20 years, never missed a payment, never maxed out my account which has a 27,000+ limit, always pay at least twice what was due, and recently paid down my account balance to less than 100.00. And still I get a rate increase; this just doesn’t make sound business sense. If those of us who are “good” customers are getting treated this way imagine how they are treating “bad” customers. I must admit when I called the company they received both “barrels” full of my anger but it didn’t seem to faze them. Their excuse of “due to economic times” we need to increase your rate BS just caused more anger. Let me remind you not only do credit card companies receive income from these outrageous interest rates they also receive income from the numerous fees that they charge. An example of a fee we don’t often think about is the merchandise transaction fee, for every purchase we make the retailer is charge a processing fee for the “privilege” of doing a credit card transaction. The consumer ends up paying for all the fees that the retailer is charge through higher prices.
This is America; I am not opposed to a business making profit this practice just goes to far. Citibank/Citigroup’s practices, as well as others, are the reason we are in the economic crisis we are in today. They received millions of dollars in “bail-out” money from the tax payer, pay out huge “retention” bonuses and have the nerve to raise our interest rates. I say it is time to send them a message loud and clear WE ARE NOT GOING TO TAKE IT ANYMORE!!!! We all need to contact the media, our state and local government official and friends and get the word out about these “SHYSTERS”. I have used my Citibank card for the last time I challenge all of you to do the same.”
Yes, many people have been put in much worse situations. But if banks are attacking their best customers, what can the rest of us expect. Halloween is right around the corner, and the future acts of credit card companies may be the scariest things any of us sees this year.
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November 10th, 2009 at 8:12 am
Just wanted to give a heads up to a slick trick Citibank tried to pull on me recently. I had two different balance transfers with them both at a 0%. One transfer expired in November, the other was good until Feb 10. I called them to find out how to pay off the November transfer balance while keeping the 0% rate until Feb. I was told on two different occasions by two different representatives that they would apply extra money paid to the transfer that expires first all other things being equal.
I sent in enough money to pay off the expiring balance as well as a minimum payment on the other balance. What do they do? They use the extra to pay off the transfer from February! Then the posted the entire balance of the transfer from November to my standard purchase rate (13.99%). This would of course cost me a lot of interest and completely nullify the Feb transfer that I made (and paid $150 in fees to do so!).
To their credit, I called them and they corrected the mistake. This representative said that their policy had changed last month. They now apply payments in the way that gives them the most money. Hope this helps someone else who might be in the same situation!
November 10th, 2009 at 11:53 am
Kia,
I don’t think this is the last sketchy story we’ll hear. Another visitor wrote in to say they were offered a balance transfer deal at 15%, though the rate might go to 29.99% once the new rate kicked in. I think the best way to deal is to simply opt out and take business elsewhere.
November 19th, 2009 at 2:26 pm
I just recently had a very similair experience as the one described above in the example with Citibank. I have been a loyal customer for almost 20 years with no late payments yet they are raising my APR to 22.9%. I can opt-out which would keep it at 18.99% until I have it paid off or till my card expiration date in December of 2010. I got the same bad economic times excuse as they person in the example did. This is my oldest card with the largest credit limit so I know that next December my credit score will take a hit when it closes since I chose to opt-out. I didn’t know what else to do since paying almost 25% interest isn’t really an option. I have other cards which I will transfer the majority of the balances to and pay off the rest ASAP. I don’t understand Citibank’s business philosophy of punishing loyal customers with good payment histories. It is forcing them to take their money else where losing a revenue stream for the company now and in the future. I understand wanting to get rid of bad debt but this seems ridiculous. I guess some other company will profit from my business while Citibank loses my business as well as many others from the looks of it.
What else can I do to not ruin my credit score that I worked long and hard to get to? It seems like Citibank is hell bent on ruining peoples financial lives becuase of their poor decisions to take on bad mortgage risks and other things.
November 19th, 2009 at 4:59 pm
If you can get the balance down to 0% and keep the card open, the available credit will help prevent your credit score from taking too much damage. Otherwise, unless you are buying a house or car soon, its better to have a larger number of dollars in the bank than points in your credit score.
December 7th, 2009 at 5:34 pm
This is my horror story, mostly involving Chase, but also Citibank is involved (also have a Bank of America and Discover card, but so far, nothing bad to say about them). With Citibank, unbeknownst to us, they reduced our credit limit to a few dollars above the balance and then my husband used the card which put it over the limit and they raised the rate to 29.99% and charged us a $39 overlimit fee. Even with phone calls and letters they have been unwilling to take off the overlimit fee or reduce the interest rate. We ended with 3 Chase accounts, all of which had credit lines of 10,000-20,000. We never had a balance of more than 40% of the credit line on any one credit card, never had a late payment. I believe the Chase cards were all obtained because of their Balance Transfer offers. When I started paying them online, I set up automatic payments for the minimum due and then would nearly always make another significant payment. We always qualified for the best rate when financing a vehicle or on refinancing a mortgage. This past summer Chase also reduced credit lines, so one that was paid off was reduced from 12,000 to 500. Another was reduced to just above the balance on the card which was about 3000. The other one had a 16,000 limit with a 6000 balance and it was reduced to 6,500. At that point, I was very mad at Chase and was determined to end my relationship with them, so paid off the card with the $3000 balance (it had a $3300 limit). That was a mistake as it still had a favorable interest rate, so I should have used the money to reduce my Citibank card balance with the obscene interest rate. Last month my elderly father became very ill, so I decided to visit him. On a daily basis, I use a debit card and not credit card, so I needed to take one with me for the rental car. I grabbed my Chase card with the $3300 limit, verified that it still had the limit and even made a gas purchase on the way to the airport to make sure it was functional. Eight hours later I go to the rental counter to pick up the vehicle and was told I couldn’t use my Chase card to rent the vehicle, that the transaction was “denied”. So I called Chase and found out that my credit line had been reduced to $400. I asked that they temporarily restore the limit so I could rent a car to visit my terminally ill father and they declined to do so. I spoke to several supervisors and begged for compassion, but they wouldn’t budge. The rental car company wouldn’t accept my debit card, even though I had more than $10,000 in my checking account and would have gladly let them put a hold on any amount. The story was the same with the next rental car company I talked to. So, I decided to figure out how to get to hospital which was in a town 150 miles away, via public transportation. I took an airport shuttle and then a bus and then walked to the hospital, as I didn’t see any taxis. I just missed one bus by about 10 minutes and had to wait 4 hours for the next one. Unfortunately my father passed away before I arrived. My stepmom said he asked about me in his final hours. I am so mad at the credit card companies, that I am going to make it my top priority to pay off my credit cards and never use them again. I feel as though I was targeted because I used their balance transfer offers, but they didn’t make money off of me as I didn’t allow the rates to increase because of late payments or going over the credit line. I will figure out how to rent a vehicle without a credit card, as I thought that it could be done. From what I’ve read in this forum, what Chase did was within their terms and conditions, but it certainly wasn’t ethical. Obviously the credit card companies made mistakes in giving people large credit lines on multiple cards, but their current tactic of reducing credit lines to near nothing without notice is not an ethical way to make up for their past mistakes.
December 9th, 2009 at 8:55 am
Patti,
My deepest sympathies. It is really disheartening to learn of the havoc caused by credit card companies. It seems credit card companies just don’t care about the humans who use their products.