Most of us have always had a love/hate relationship with our credit cards. Whether its convenience, access to cash, fraud protection…we’ve all come to depend on our credit cards. Many of us have stuck it out with the same credit card company for years, believing, falsely, that we were building relationships with these banks that would be helpful down the road. Such has not been the case in 2009. In fact, credit card companies have been putting the screws to customers all year long, with the latest and most egregious example being Citibank’s recent interest rate increases.
Beginning in mid-October, Citi began notifying customers it would be raising interest rates to as much as 29.99%-for no reason. Or at least no legitimate reason. 29.99% is a bit of a magic number in the credit card world as it is usually the rate reserved for people who default, or fail to pay, their credit card. A few years ago, it would take at least two missed payments to get slapped with this interest rate. Today, one missed payment can lead to a 29.99% interest rate with most credit card companies. And with Citi, simply having their credit card in your wallet is apparently all it takes.
Visitor’s of Smart Balance Transfers have written hundreds of posts about this matter. Most of the people slapped with a Citibank interest rate increase reported having excellent credit scores, low debt, and high credit limits. Many had been customers for up to 20 years. Unfortunately, in today’s credit environment, neither loyalty nor good credit histories have been enough to save people from substantial rate increases.
This, in turn, has made many people’s relationships with their credit cards very one sided. The love is gone, replaced by hate and anger. Unfortunately, credit cards are still and will likely always be a necessary evil. They are extremely convenient and, when used properly, provide substantial benefits. Thus, the key thing today is getting a good 0% credit card, not just any credit card. And once you get a good credit card, be sure to keep balances as low as possible. If you owe Citibank nothing and they raise your rate to 29.99%, the rate increase is irrelevant. However, if you owe them $10,000, a rate increase can be disastrous. In the post-Lehman economy, credit cards need to be used like charge cards or as short term loans. This is the only way to avoid paying the price for the mistakes made by our banks.
To learn more about what others are saying about recent rate increases, see the article Citibank Interest Rate Increase Solutions which has over 50 visitor comments
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December 8th, 2009 at 8:43 pm
Ridiculous! I will never be a Citibank customer again after this increase!
December 29th, 2009 at 12:37 pm
Having received a motice of increase – Called to speak with a CSR and was told there was nothing that could be done – except to opt out – Since I have had the card since the early 70′s – I chose not to opt out – but promptly called another company which offered 0% for 9 months – Transferred a portion of the balance – so to heck with iticard – I won’t close the account but be assured they have lost me and can place me in the column with their recently published 3rd qtr losses. What were they thinking this would build customer loyalty ????????? Oh yeah- Citibank is part of the reason for the financial debaucle we are facing today
December 29th, 2009 at 12:39 pm
Having received a notice of increase – Called to speak with a CSR and was told there was nothing that could be done – except to opt out – Since I have had the card since the early 70′s – I chose not to opt out – but promptly called another company which offered 0% for 9 months – Transferred a portion of the balance – so to heck with citicard – I won’t close the account but be assured they have lost me and can place me in the column with their recently published 3rd qtr losses. What were they thinking this would build customer loyalty ????????? Oh yeah- Citibank is part of the reason for the financial debaucle we are facing today
December 30th, 2009 at 11:40 am
This is absolutly a travesty! I did not receive the notice in time to opt out and now I am told I am stuck with the 29.99%…ABSOLUTELY RIDICULOUS!
January 26th, 2010 at 9:14 pm
Thank GOD for Obama’s new credit card regulation laws that will not allow Citi bank and others like them to increase my interest rate to an even 30% from my present 29.98%
January 27th, 2010 at 10:45 am
I agree to a certain extent, though I blame the new credit card laws for motivating banks to charge those obscene rates. It will help people in the future, but clearly it has hurt you and millions of others whose interest rates were increased before the rules took effect.
February 3rd, 2010 at 10:42 am
Citibank SUCKS big time. I’ve had a card w/them for years and was NEVER LATE or even near the limit.Unfortunately,because of injuries, I had to put some of my medical bills and prescriptions on my card. My rate has been 7.9% since I opened the account about eight years ago.Last May it increased to 14.99%.When I called,they told me ,”It’s not you,it’s everyone because of the economy.”It then increased to 29.99% this month(Feb2010).I’m currently on disability(my income dropped about 65% overnight).I had surgery a month ago to amputate two fingers on one hand and one on the other hand.I know I probably won’t ever get back to the salary I had.This is pushing me so close to bankruptcy,I’m not sure what to do. I misunderstood the rate increase and thought my account would be closed and the balance due (I’m on a lot of pain meds)if I opted out.I have worked all my life and paid my debts on time.I guess it doesn’t mean a damn thing to try and be a good citizen and be responsible and do the right thing.I can’t stomach the thought of filing bankruptcy,but I may have no choice. When we(the public) make a mistake ,NO ONE bails us out.If you’re a huge corporation,the Government runs to your rescue with untold BILLIONS$$$$ of our TAX dollars.BTW- When I lived in Manhattan years ago,I worked For Lehman Bros and then Citicorp.What hasppens when this situation causes many to file bankruptcy??
February 3rd, 2010 at 11:28 am
I am really sorry to hear of both your personal problems and the financial issues created by no fault of your own. You make many valid points and the sad thing is, no one is here to bail us out. To bail out real, honest individuals who have bad luck.
As to your particular situation, I believe you likely received an opt out notice from Citi in the fall that could have easily been mistook for junk mail. The opt out notice would have allowed you to close your account and keep your same interest rate. Unfortunately, the opt out date has passed, which is why your rate is 29.99%.
A few people have written in and said they succeeded in getting their rate reduced by doing the following: calling Citi (and being as nice as possible), requesting a US rep (still being as nice as possible) and then a supervisor. Explain that you never got the notice and plead for them to help. They might work for a heartless corporation, but these people have hearts. A little honey can go a long way.
If the first rep can’t help you, try again a few times. Keep being as nice as possible, explaining your situation and pointing out that they are the only ones who can help you. This has worked before and it could work for you.
If you are unable to get a break from Citi, you should look into a 0% balance transfer credit card immediately. At 29.99%, you’ll be spending $300 or so a year for every $1000 you owe, and getting out of the hole will take five or ten years and cost you a fortune. If you have a good credit score, you’ll like be able to transfer at least some of your balance to a lower rate card. (You can compare 0% balance transfers here.)
I really wish you the best and do let me know if you have success dealing with customer service. There are a lot of people who have been put in the same situation and if you have success, perhaps others will be able to benefit.
Jeff
February 4th, 2010 at 5:29 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.