In mid-October, comments started flooding in from Citi customers that received interest rate increases from Citibank to as much as 29.99%. During the following weeks, over 100 comments were posted from justifiably angry customers, many of whom had great credit and long relationships with Citi. At the time, I was happy to see that people were opening their credit card mail and using balance transfers or opting out to avoid these monstrously unfair rate increases. However, my concern was for the people who accidentally failed to read their opt out letters.
Yesterday, the first comments started to come in from people who missed the opt out deadline. My fear is that many, many more people will be commenting. Unfortunately, opting out is likely no longer an option. In rate increase letters I have reviewed, the opt out date was November 30th. This means that many people are just receiving their first bills with 29.99% interest rates. And some who pay online or don’t examine their statements closely may not notice that they are being charged this absurd interest rate for months.
Without the ability to opt out, people who have been slapped with a 29.99% rate have no option but to do a balance transfer to a credit card that offers a low or 0% introductory rate and a lower long term rate. The latter shouldn’t be hard to find, as very few credit cards charge their customers 29.99% unless they fail to pay. However, the number of 0% balance transfer deals is very limited at this time and may become harder to obtain once the new credit card laws take effect in late February.
Consequently, I strongly recommend that anyone who has been slapped with a 29.99% interest rate immediately apply for a new, 0% balance transfer credit card and start the process of moving high interest debt to a new card. With a 29.99% rate, monthly interest expenses on a $5000 credit card balance will balloon to over $100, with the yearly cost nearing $1500. If that balance is transferred to a 0% APR credit card, you can save that $1500 and use it to reduce your debt by nearly 30%-clearly a much better option.
As long as low rate balance transfers exist, no one should be stuck paying Citibank 29.99%. Just because you missed the opt out, doesn’t mean you can’t bail out of Citibank’s grasp and the sooner you do so, the sooner you’ll stop pouring your hard earned money into their coffers.
To learn more about current balance transfer offers and apply online, please visit the homepage of Smart Balance Transfers by clicking here.
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February 4th, 2010 at 5:23 pm
Please see http://www.smartbalancetransfers.com/blog/2010/02/letter-vikram-pandit-credit-card-rates-719/, where I have posted on open letter to the CEO of Citibank to share your thoughts.