About a month ago, visitors began posing comments on Smart Balance Transfers about a Citibank rate increase to 29.99%. The backlash was huge, with over 100 comments posted to date, mainly from customers with very good credit, long histories as Citi credit card customers, and oftentimes, low balances on their accounts.
Yesterday, a new breed of Citibank credit card complaints began pouring in, and these are just as disheartening, though seemingly less severe. One visitor reported a rate increase to 23.99%. Another reported getting a notice that their rate was increasing from 16.99% to 20.99% on the same day they got an offer for a .99% balance transfer. A third reported that her rate was increasing from 12.24 to 16.99%. This customer had a balance of $10,000 on her card, and the customer service representative encouraged her to keep her account open since the increase would only cost her $28 a month. The customer service rep, apparently short on math skills, overlooked the fact that this amounted to over $300 annually.
Complaints about the Citibank rate increases that have been occurring have outnumbered the complaints levied against just about every other credit card company this year. One visitor reported that she had to liquidate her savings and retirement to pay off her balance. Another reported having to sell his shares of Citi stock (at profit, fortunately) to pay off his bill. Others are simply confused.
Ultimately, the latest round of rate increases may end up costing consumers more than the dramatic 29.99% increases that flooded mailboxes earlier this month. The reason these increases may pose a greater issue is that, on the surface, they are much less dramatic than the massive rate hikes. Turning down and opting out of a 29.99% increase was a no-brainer. But many people are thinking hard about what to do with 3% to 4% increases, as concerns for their credit scores come into play.
Unfortunately, a 3% or 4% increase in interest rates, especially ones that are already high, can make debt repayment very difficult. At a 20% interest rate, every $1000 of debt will accrue close to $200 in yearly interest. Thus, for those with good credit, opting out and applying for a new credit card may be the best option. And for those with balances, taking advantage of a 0% balance transfer can really help reduce interest expenses and expedite the process of getting out of debt. In the end, everyone must choose whether they want to do business with this company. And if another credit card company will treat you better, then by all means take your business elsewhere.
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November 18th, 2009 at 12:58 pm
I just received the notice of change in terms for my ATT Citibank card. The notice of change does not specify whether the increase in APR applys to futures transactions only, or whether it also applies to my existing balance. In addition, it does not specify whether it applies to existing promotional rates. I currently have approx $10,000 at a 1.99% lifetime rate. At least with JPmorgan Chase’s notice of change in terms it clarifed that the increase in APR would apply to both new transactions and existing balances, and that it would not apply to any existing promotional rates. Is there anyone out there who did not opt out, had a promotional rate, and then learned that their promotional rate was increase?
November 19th, 2009 at 9:39 am
Dave,
I would get on the phone and request a clear statement in writing. You definitely don’t want to risk your 1.99% rate, unless it is due to expire soon, in which case you might want to consider doing a 0% balance transfer anyhow.
November 20th, 2009 at 8:30 am
I just got a notice from Citibank and was surprised at how easy they were taking it on me compared to the 29.99% rates mentioned. They raised my rate from 13.99% to 16.99%. They also stated that my card now has a program that will refund me 10% of the interest charges for paying on time (or something like that). I also continue to get 0% balance transfer offers (with offers to raise my credit limit) from them and AT&T Universal regularly.
I do have good credit but it is by no means the best out there. I always pay on time though. I do a lot of balance transfers on Citi and AT&T but I always pay them off before the promo period is over. I don’t know that I’ve charged anything (other than BT) on either of these cards in years. I have no idea why they are playing so “nice” with me.
December 1st, 2009 at 1:18 pm
I have an ATT card owned by citi… they recently informed me that my interest rate was being raised to 15.99% (up from 10%)… when I called I was told “that the interest rate increase is for the maintenance of the account and had nothing to do with my good credit history”… I have had this card for over 20 years and really enjoyed doing business with them… I cannot risk my credit rating by opting out… I did talk them down to 12.99% for 6 months… interestingly enough when my husband rec’d his rate increase letter they were raising it to 16.99% (guess it costs more to maintain his account). In any event, will payoff and leave the account alone. Bye Bye Citibank
January 10th, 2010 at 6:09 pm
Unbelievable! I was at 2.99% with Citibank and just got my statement to find my APR at 29.99%. I called and they said they sent out a letter in Aug of 2008 for the opt out. I must have missed that….2008 Wow and they don't care. Well neither do I I am gone so fast it will make there head spin. With a credit score of 790 I don't think I will ha ve trouble getting something a little more reasonable. Citi I hope you go under!
January 11th, 2010 at 3:08 pm
Glen,
Its good to hear you have the credit score to get out. To think that Citi now wants 10x as much interest from you as before is absurd. Definitely time to take your business elsewhere.
February 4th, 2010 at 5:30 pm
If you did not read your opt out notice and just learned that your interest rate increased to 29.99%, please share you concerns on the open letter to the CEO of Citibank I have posted in hopes that this situation will be resolved fairly. See http://www.smartbalancetransfers.com/blog/2010/02/letter-vikram-pandit-credit-card-rates-719/ to read this letter.
It is my hope that Citi will realize it made a mistake and help out the people who have been hurt by this rate increase. The more people who share, the better chance we have of getting the attention of the people who can fix this situation.