Tuesday, November 25, 2008

Citibank To Raise Interest Rates On CreditMattersBlog.com


The background: About ten days ago Citibank confirmed that it would be raising interest rates on some of its credit-card customers. A Citibank spokesman confirmed the rate hike, but didn't specify how many customers would be impacted by the increase. According to a Wall Street Journal source, the rate hike was expected to impact less than 20% of Citibank's card portfolio, or about 11 million customers. The spokesman was certainly given an opportunity to dispute that 20% figure, but didn't. We were also told that customers who are impacted should expect to see an interest rate increase of about 3 percentage points -- on average (story link here).

Need to write an opt-out letter to Citibank? Use this one (link here)

The setup: I have been a Citibank cardmember for nearly seven years. I have never been late. I have never been over my limit. I rarely use more than 2% of my Citibank limit during any given month. My current balance at Citibank is $0. I pay my balance in full every month. My Equifax FICO score is currently 786. I pulled it this morning (specifically for this story). Across all of my credit cards, I have less than 1% utilization. Indeed, I currently have $877 in outstanding balances on all of my cards combined. I pay all of my bills in full each month. My Bankcard Industry Option FICO score, meanwhile, was recently at 808. If you're not familiar with the Bankcard Industry Option FICO score, read my story about it (story link here).



The deal: I received a letter from Citibank on Monday. In it, I found a change in terms -- and a right to opt-out notice. Citibank, it says here, is increasing my variable APR for purchases. I will be priced at prime plus 8.99%, with a minimum of 14.99%. As of October 1, 2008, according to Citibank, this purchase rate would have been 14.99% (if the rate increase had been in effect at that point). That would be more than double my current rate of 6.65%. Turns out that I happened to pull my Equifax FICO score on October 1, 2008. That day, my FICO score was 777.

Also, and this is important: The Citibank letter says that these "changes will be effective for all billing periods beginning on or after December 3, 2008. The changes will be effective whether or not you receive a billing statement." I was curious about this statement, so I called Citibank this morning. I wanted to know what happens to those who wait up until January 31, 2009, to opt out. Will they be assessed the new rate until the time they opt out?

The Citibank Opt-Out Decision -- Everything You Need To Know (link here)

According to Citibank, here's how it works. Your current rate will stay in place all the way until January 31, 2009. However, if you do not opt out by that time, Citibank will retroactively charge you for interest from the December 3, 2008, date. Got that? Rates stay the same until January 31, 2009. After that, if you don't opt out, Citibank is going back and grabbing the accrued interest from December 3, 2008.


Now, to my point. I wrote a story about ten days ago detailing Citibank's proposed rate hikes (story link here). Since then, a boatload of readers have left comments (in the comments section of that story) telling me about their high scores and perfect payment histories with Citibank (see comments here). Given that Citibank has allowed all of its customers to believe that less than 20% of its customers would be receiving a rate increase, I found it fascinating that so many people were showing up on my site telling me that they have high FICO scores, perfect payment histories, no balances, and risk profiles that you wouldn't think would warrant a rate hike. Many of these customers, you'd think, would fall into the 80% of the customers who would not be seeing a rate increase. After hearing so many of their stories, I wrote a story late last week (link here) questioning the 20% figure being bandied about in the press. Indeed, I do not believe that Citibank is telling the truth about how many people are receiving interest-rate increases. As such, I said as much.

Last week I was convinced that more than 20% of Citibank's customers were receiving rate hikes. But I also said that I didn't believe that every customer was receiving one. Therefore, this rate increase was affecting more than 20% but less than 100%.

Now hear this: I believe that Citibank is completely full of it. Given my risk profile (very little risk), given my utilization (nearly nonexistent), given my fairly long history with Citibank (almost seven years), and given how well I have handled my accounts during the past 20 years, I am willing to bet that Citibank is perpetrating a total scam on its customers. Rather than fessing up, and simply doing what Nordstrom recently did with its rate increase (story link here), Citibank has decided -- it seems -- that it wouldn't go down well if it told everyone that a rate increase was being implemented on every one of its customers. Therefore, it has allowed a "source" to float the 20% figure in the press. And while I am talking about rates, we've been made to understand that the average rate increase would be 3 percentage points. I have not met a single person who has had an increase of 3 percentage points or less. In fact, nearly everyone has seen a substantial jump. I'm calling B.S. on that part of Citibank's story as well.

I'm calling Citibank out. Citibank, why don't you go on the record and tell all of your cardholders just how many people are being affected by this rate increase. Stop hiding behind your anonymous source. Citibank's customer-service representatives have been telling customers that this rate hike is being implemented across the board. Citibank, is this rate hike across the board? It's certainly looking that way.

I don't have to opt out of Citibank's rate increase. I carry no balances. This APR hike doesn't hurt me. However, I can't trust Citibank. How can I? My score is not far from 800. If anyone was safe from this rate hike, it should have been someone like me. Or people like those who have been leaving message after message (day after day) on my blog. I should have listened to my mom when she said that you can't trust bankers. She nailed that one.

Editor's Note: I have now written a follow-up story to this one. Please read it (story link here).

Less than 20% of Citibank's customers are seeing a rate increase? Something smells, Citibank.

I think I, and all of my readers, know what it is.

Related Articles:

  • CNN Interview -- Reaction, Comments Regarding Citibank Rate Jack Story (CNN Video inside)

  • Opt-Out Letter For Citibank Credit Card Customers

  • The Citibank Opt-Out Decision -- Everything You Need To Know

  • Citibank's Rate-Hike Strategy -- Where To From Here?

  • American Visa Signature Card -- You Can't Afford To Leave Home Without It

  • U.S. Agrees to Rescue Struggling Citigroup

  • Citibank To Raise Interest Rates On Its Plastic

  • Change of Terms in Your Credit Card Agreement -- How Do You Reject The New Terms?


  • 164 comments:

    1. 800 is the new 760.

      :-D

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    2. Virgil, what do you think? Citibank lying to its customers? Something doesn't smell right, eh?

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    3. I can hardly keep up with all the news, but yes, something ain't right.

      The changes in terms don't seem fair to responsible users of credit, as we have discusseed in other articles.

      It would be interesting how this plays out. I'm sure we'll be prepared.

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    4. Yep. People like me will continue to poke holes in Citi's story as well.

      But we'll see what happens in the future. Crazy times we're living in.

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    5. FYI, I don't have Citi.

      I don't even remember which credit card I got when I was at Sears Savings Bank, LOL!

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    6. I opted out today. I am irked because I get online statements. The next period starts December 3 ( when the rate would have gone into effect) and I got my letter today!

      I have pretty good credit, haven't check lately, but over 750 I think. Never late, never over. Right now on the city card I am carry a balance of -$1....yes they owe me a dollar.

      I like having cards with three different banks -- BOA, Discover, and Citi -- because it gives me more leverage. I will have to see if the re-evaluate this position. My citicard is good until 12/09.

      The lady on the phone didn't even try to talk me out of opting out -- just said, i totally understand....

      I know times are tough, but the customers who can walk away will either opt out or put the card in a drawer.
      christina

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    7. I have one Citi card. Fairly good-sized limit. I use it every month. I'll be cutting back on my usage. No need to enrich these guys.

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    8. Credit Matters:

      Not sure if you read this already:

      http://cody.blogs.foxbusiness.com/2008/11/24/citigroup-vikram-prince-and-their-stooges-a-history-of-utter-lies-or-incompetence-in-their-own-words/

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    9. Christina, thanks for the note. I have relationships with 12 different institutions. I like options as well. This Citi situation just reinforces what I say about having backups. You always want to have options if a creditor doesn't something stupid.

      I would call what Citibank is doing pretty stupid. Alienating good customers.

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    10. Thanks for posting that, V. I know Cody Willard. I'll shoot him a note.

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    11. I hate it when people have to close a card for opting out of the new terms.

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    12. True. Many cards would make you close the card immediately if you opted out. In this particular case, Citi is allowing its customers to keep the card open until the card expires. Pretty liberal.

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    13. Great article; you and I are almost identical in all of this: same risk profile (my FICO is almost 800, depending on bureau); I've PIF'd most of the time; my utilization is very very low; and I, today, got the exact same letter taking me to the exact same rate. Citi is being really shortsighted about this. I don't worry about guys like you and me, I worry more about the cardholder who's doing OK and keeping up, but has a balance and this is going to put them in a bad place or closer to default. Given that we just handed Citi billions of taxpayer dollars, this seems almost criminal.

      Anyway, keep up the great work.

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    14. "As of October 1, 2008, according to Citibank, this purchase rate would be 14.99%. That would be more than double my current rate of 6.65%. Turns out that I happened to pull my Equifax FICO score on October 1, 2008. That day, my FICO score was 777."

      So much for that lucky number! LOL!

      Congrats on the 786, CM!

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    15. CM,

      Do you wonder if the 20% could be up in the 800's?

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    16. Citibank, IMHO is now ShittyBank!

      Sorry, I could not resist. I apologize for the naughty word.

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    17. My Citi AAdvantage Master Card has experienced no change in rates, but it's already high at 13.99%. But I think this is fairly typical for airline rewards cards. The rate is down from 14.99% this summer.

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    18. I've been telling people at work about this, not one single person who carries a Citi knew this was happening. They do now and are doing the appropriate thing. I would say that Citi is doing some "financial darwinism" in hoping the dumber cutomers don't notice, but I would not call any of my co-workers stupid. They just never imagined Citi would do this.

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    19. Yesterday I called all my friends,14 people to ask about recent Citi CC rate hike.Believe it ,or not every single person got rate increased.Taxpayers money was used to bailout Citi,and in return we getting 'big thank you' by increasing rates two or three times...

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    20. Cosmo, thanks for the laugh. I like it. First we had Chamu (Chase + Wamu) and now we have Shittybank.

      Nice.

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    21. Wait...they backdated it to October 1st? Can they do that? That seems a little shady to me.

      Of course it wont really affect you since you don't carry a balance but still.

      I agree, CM, come on out of it Citi, we all know that you are begging for cash and screwing your customers. You know..those same customers that made you so big. What do you think is going to happen when there are other options? You think these folks are going to stick around forever?

      And a 14.99% is ridiculous for your score.

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    22. Virgil, I have seen people with around 800 get these rate increases. As you know, 800 is fairly rarefied air. Not a whole lot of people up there.

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    23. Marcus,

      In a way, Citibank's activity is not a major surprise. If there is ANYTHING that can be deemed a precursor to Citibank's activities today in the United States, I encourage you to look up what I'm about to say. You'll find that everything will fit in just right.

      Simply look no further than right across the pond.... In the United Kingdom, Citibank took over Egg, an internet banking company, along with their credit card portfolio.

      Upon Citi's acquisition, Citi announced their plans to cancel credit cards for some of their customers. In a press release, Egg/Citi cited that it closed cards on 7% of its customers, citing "deteriorated credit history."

      Of course, in the 21st century, people can come online and discuss what happened. You're never going to guess what type of customers that 7% entailed... they were virtually perfect history, PIF customers with no (if not minuscule) changes in their credit file!

      Deja vu? Only this time, they're ratejacking instead of closing outright.

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    24. Lion, the October 1 date is just a reference point. It's just using that as an example of what my rate would have been -- based on the new formula for my rate. The new rate doesn't kick in until my first statement after December 3.

      Given my risk profile, though, you wouldn't think I would receive an interest-rate hike. And that's why I am calling Citibank out.

      I believe they're lying. If not 100%, then 80%-90% are receiving hikes? It sure as heck can't be 20%.

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    25. Marshall, thanks for the note. Your minor decrease can be chalked up to the prime rate floating lower. Your variable rate card just followed it.

      Not sure what's going to happen with the rewards cards. You're right. These cards already have high interest rates to begin with. Maybe these are already high enough for Citibank's tastes.

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    26. Oh ok I see.

      It doesn't make that any better. You are in a risk profile that doesn't warrant a rate jack. I could understand if you had a string of lates, suddenly carrying large balances and missing payments. But that isn't the CM I know and read daily!

      They are blatantly lying. And it is bullshit. I am glad you called them out. Someone needs to. I say before they get my tax dollars they have to show hard numbers for everything including just how many customers got rates increased and EXACTLY why they got increased.

      BTW...did they even give a reason? Cause if folks with no lates, no balances and an upper 700s score aren't good customers...who the hell is?

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    27. Maybe their "source" was confused and that 20% is the number who are NOT getting hikes? Nah...seems too high. I say 100% got hiked.

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    28. Two questions I hope you can answer. First, my letter says "The changes will be effective for all billing periods beginning on or after December 3, 2008". Yet, I have until January 31, 2009 to opt out. How can this be? Second, the my letter says "As of October 1, 2008, this purchase APR is 24.99%". How can this be? my purchase APR as of today, November 25th 2008, is actually 10.49%. I'm not a financial brain and those two lines don't make sense to me. Can you explain them? Thanks.

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    29. Zen, thanks for the post. By the way, I am not even saying that I am special. There are people with higher scores than ours who have received these rate increases.

      My biggest gripe is that Citi is trying to claim that less than 20% of its customers are experiencing these rate increases. I think it's total bull.

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    30. Jim, thanks for the London connection. During the Internet age it's a lot tougher to get away with this kind of garbage.

      If Citibank came to my site, and saw the claims that have been made by some of my readers (like perfect histories and scores in the 800s), they could say there is no proof. That's why I posted a screen shot from my FICO score and why I posted my score from Oct. 1 as well.

      There is something wrong when a bank is claiming something that seems impossible.

      I'd love to know Citibank's criteria for these increases.

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    31. Anon@10:37am, the October 1, 2008, reference is just as example of what your new rate would have been if the increase had been pushed through at that time. It hasn't yet, so you can ignore the October 1 date. Citi is just using it as an example to you -- to show you how the formula works.

      As for December 3, that's a good question. If you have until January 31, shouldn't your rate stay where it is until then? That makes perfect sense.

      Anon, I'll call and find out.

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    32. Lion, they do not give any reasons in the letter. Just says that we are changing your card agreement.

      By the way, I posted my FICO score because I think it gives me more credibility. There will be those out there who will wonder if I am full of it -- if I do not post a picture of my FICO score.

      I only used EQ because that's the bureau that Citibank pulls for me.

      Should I pull my TU and EX scores for a full picture?

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    33. Lion, here's the way it works in journalism.

      I would call Citibank's spokesman. I would ask him to confirm the rate hike. He would.

      I would ask him how many customers are affected. He would have declined to put a number on it. I would have said does it affect all customers? Spokesman: no. Does it affect 80%? Spokesman: no.

      I have a source that is telling me that it's less than 20% -- does that sound about right? Spokesman: it's in the ballpark. And I run with my source's information.

      Because I have been covering Wall Street for so long, I can tell you that's how the interview went down.

      Citibank cheesed out on the question because it knows that the true answer would not have been well received by 54 million Citibank customers.

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    34. Clutch, most people don't even read their disclosures. The only redeeming thing about this particular disclosure is that it was sent by itself in an envelope. At least Citibank wasn't hiding it in a billing statement.

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    35. So far no change on mine; I've been watching the interest rate when I check the accounts online. If they jack the rate up, I'll leave the accounts open and continue to PIF, but the cards will see a lot less spend.

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    36. DM, watching the site won't be helpful. Citi's site still shows my current rate. Plus, the new rates won't be effective until my billing cycle beginning on or after December 3.

      The mail will be your best place to watch. Forget watching it online.

      Pay in full is the only way to be with Citibank (and all creditors). That way you can avoid their shenanigans.

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    37. 6 months ago we could all look at this and patiently wait for the market to work itself out as in no bank would do what Citi is doing for fear of losing customers. Now, in this bailout economy they don't have to be particularily concerned about losing customers or being competitive in the market. If they lose a ton of customers the Government will just put more debt on the taxpayers to continue to prop them up. Great article by the way.

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    38. Anon, thanks for the post. And welcome to the site.

      I think you're right. These banks figure they'll just get another handout. Good customers be damned under that scenario.

      Some of these banks are doing long-term damage to their brands, though. American Express used to be the Tiffany of the credit-card industry. I would suspect it's not so highly thought of today.

      I'm not closing my card because I'm using the utilization and the age to my benefit -- not Citi's. They can continue to maintain my account.

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    39. i called and politely had them look up my current rate of 7.99% and emphasized the rate increase to 14.99% is rather drastic.

      i then asked if and when they get the bail-out if they were planning on dropping the rates.

      then i pointed out that it is not good business to punish your clients when you make bad business investments.

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    40. Anon, did it feel good? LOL. I still need to call today as well. I want to find out about the December 3, 2008, date in our opt-out notices. Says that these rates go into effect on or after December 3. But we have until January 31 to opt out. What happens in between December 3 and January 31?

      I'll find out.

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    41. Well, we opted out today. My wife said they made no effort at retention.

      Our card is good until Dec 2010... it will be interesting to see if they make me an offer in the next 2 years to opt back in. Can/does that happen once you have opted out?

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    42. Perfessor, most times people are not allowed to opt back in. However, given that your cancellation date is still two years out, anything can change! I would not rule it out. Anything can happen. Two years is a long, long time.

      Thanks for the note.

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    43. CM, Do you have any clarification on the 12/3-1/31 opt-out/interest rate question? I was wondering how that would work myself.

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    44. CM, thanks for the heads-up as always. I'll be watching my mailbox!

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    45. Here is how the December 3 thing works.

      Your rate will stay the same all the way until January 31, 2009. But if you do not opt out, your account will be charged interest retroactively going back to December 3.

      If you do opt out, your rate will be unaffected -- and you can simply ignore the reference to December 3.

      I think Citibank should have told customers about this. They're now leaving it up to me to tell the story.

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    46. CM, Thanks for the update.

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    47. I have now updated my story with the new information, too.

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    48. Any advice on this scenario? My card expires 2-28-09 and I've been hit with the 24.99% new and improved rate. I intend to opt out but do you think I will get my new credit card in time as typically those come a month or so in advance it seems? Ideally, I like to accept the new credit card, entending my date for utilization purposes and then opt out by Jan 31. Think that is possible?

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    49. I have been a Citicard holder for over 10 years now. At this time I have a balance of $5000.00 on my card due to 2 expensive pet emergencies. $6000.00 is my limit. My APR was 7.99%, now increasing to 14.99 percent. Never had a late payment and my average payments are $300.00. My credit score was 780 at my last check (about a year ago). I called them and they made no attempt at retaining me as a customer. I am having my other low interest rate credit card pay them off and I will be closing my Citicard account.

      ReplyDelete
    50. Anon, great question. That timing is tricky. Not sure if you'll get the card before January 31, 2009. Fact is, many cards come just about 2-3 weeks before the card expires.

      It's really anyone's guess as to what the timing will be like, Anon.

      Wish I could give you a more definitive answer.

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    51. Anon@3:56pm, couple of things here. If you're doing a balance transfer why not just accept the new rate and leave the card open? May as well let the credit limit help out with utilization. And, your card will continue to remain open, too.

      Even though I now plan to use my Citi card sparingly, I am accepting the rate hike -- and using the credit limit to my advantage.

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    52. It's really unfortunate that creditors can do this at will....and all they have to do is send out a disclosure. Which many consumers don't even read.

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    53. Chelo, true, indeed. But that's really never been my problem. I'm mostly ranting about Citibank saying that this interest-rate hike affects less than 20% of its customers. If people with 800 scores are getting these increases, just what does the other 80% of Citi's cardholders look like?

      We already know that Citi's card portfolio is seeing a higher rate of delinquency, so I think it's safe to assume that everyone isn't above 800.

      The sad part, Chelo, is what you just mentioned. Many (too many) customers don't read these disclosures. I hope they read this one.

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    54. Well, I'm two for two now with Citi. Just received the statement from my other Citi card. Same increase as the first one.

      This one goes from 5.74 APR to prime + 8.99, minimum 14.99.

      The WSJ report which noted that less than 20% of Citi's customers would receive an increase is at odds with this (11/14) NY Times report. According to this article, customers who haven't received a rate increase in at least two years will be getting one.

      ["After pledging that it would no longer reserve the right to raise interest rates at any time for any reason, Citigroup now plans to start raising rates for customers who have not had an increase in at least two years. The move appears to backpedal from a commitment that Citigroup executives made to Congress in early 2007 when they tried to fend off greater regulation by promising not to raise rates until an account expires."]

      Has anyone received "the average" two to three percentage point increase?

      ["Citigroup said that, on average, it planned to raise its customers’ effective borrowing rates by two to three percentage points — a move that would cause some borrowers to pay more than 20 percent interest instead of 17 percent. Some rate increases could be much higher."]


      http://www.nytimes.com/2008/11/15/business/15citi.html?partner=rssnyt&emc=rss

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    55. Scott, as I mentioned in my story, I haven't found a single person who has received a 3% increase or less. Not a one.

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    56. Just thinking about it, it looks as though every person is going to a minimum of 14.99%. That seems to be the floor at Citi right now.

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    57. My Citi Mastercard notice stated a new rate of Prime Plus 13.99% with a minimum of 19.99%. My FICO score is in the 700's and I've been a cardholder for over 7 years with a flawless history of payment. I need a credit card for business travel, and applying for a new one would just ding the credit score, so I won't opt out. This won't hurt me because the balance is fully paid each month, and for the time being, at least, this card still pays cash dividends. The "20% of cardholders" claim seems to be full of BS, however.

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    58. Yep. It's a "no risk" position. If the prime rate goes north of 6% Citi's revenues increase as 8.99 + prime seems to be the new lowest plan. All other "hangers on/opt out customers" will fall off the books within two years.

      That will eventually leave Citi with a solid 14.99 floor, like you said, for every single one of its credit card holders.

      I think it's a dumb strategy. Citi will probably lose more good customers than bad.

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    59. Anon, thanks for the note, pal.

      Glad to hear that this won't harm you. Since you don't carry balances, no harm, no foul.

      I'm not upset about the rate increase, by the way, I'm miffed because Citi is trying to spin this as though it's not impacting that many people. And that's BS.

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    60. Scott, I'm with you, buddy.

      Heya, Scott, when did you start reading my blog? Are you new or have you been a lurker for a period of time?

      Glad to have you posting. That's why I ask.

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    61. CM, I found your blog through a Google search last week after I received my first Citi statement.

      BTW, did you get a chance to view that PBS segment? I'm interested in your take on the piece.

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    62. Scott, it's on my to-do list for this evening. Was a long day at CreditMattersBlog.com.

      As soon as I see it, I'll post a message.

      Thanks again for the link.

      And thanks for sticking around the site. It's always nice to have quality readers who contribute to the site. I've got a great bunch of readers here. Quality comments and no arguing and fighting. Just a bunch of professional attacking issues instead of people.

      I lucked out.

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    63. My credit score is 776 and my Diamond Preferred card currently has a 6.99% rate. It's ironic how their website advertises the same card with a rate of 7.74%. A jump from 6.99 to 14.99 is appalling. I'm 26 and have been a happy customer for the last five years.

      This is a huge slap in the face for me.

      I'm PIF, but it's the principle. I understand the rates fluctuate. Not this much. The customer service rep was completely apathetic during the whole conversation.

      I opted out. My account expires in two years, so they have time to fix this fiasco before they lose another good customer.

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    64. Ed, I like your thinking. My card actually expires in August of 2010. They do have a few years to figure it out.

      Thanks for the post. It's much appreciated. I think that my readers have spoken loud and clear. They hate these rate increases -- especially when it's double their current rate.

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    65. Is it possible that Citi is actually using the rate increases to have customers opt out so they can report that thier exposure is reduced? If they can point to the number of accounts that will be closed (2009-2011) they can argue that they are a viable banking institution worthy of credit. It matters none that there may be balances that are owed, they would incur no ADDITIONAL exposure on millions of accounts. People that can't pay now are a write off anyway. I guess if I were negotiating for cash from the feds I would want to limit my exposure from unsecured loans. I could point to all the accounts that will be closed in a certain time frame, the limits on the accounts and the payment histories on the accounts. How perfect is that? Take the people that pay, have them opt out and pretty much be assured that those same people will continue to pay. There is a reason the opt out is "liberal". They limit outstandings and write off the rest for the bailout.

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    66. Wouldn't work, Lisa. You're talking about prospective figures. Also, what would happen if some of those who opted out also applied for different Citi cards? You could have a net neutral.

      Not sure what Citibank is up to. But if pissing off customers was what the bank had in mind, mission accomplished.

      ReplyDelete
    67. Interesting. Has anyone that opted out attempted an application for a different Citi card? That might be a fascinating test. Can you obtain the credit at a lower rate? My guess is no.

      I really don't think Citi wanted to piss off the customer base. They are negotiating and limiting their loss. The economic future for any of us to pay is questionable. The ability for Citi to say their debt is limited to a certain amount on a certain date is good data.

      The feds operate on data (good or bad data I have to admit). Just bring paper!

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    68. Lisa, I don't think Citi wanted to piss off customers, either. Was just throwing that out there -- because I can. Hehe.

      Certainly it's true that Citi would like to point to data that show it has limited its exposure. But it's nothing more than a snapshot.

      During the third quarter, even during a terrible market, American Express added 2 million new cards (net). I bet Citibank adds more on a quarterly basis.

      I wonder how difficult it is right now to get a Citi card.

      ReplyDelete
    69. I am a citibank customer for 10 years. Got the letter for the two card accounts I have with them. They moved my apr up from 3% to 18% on existing balance, so transferred balance to different bank. Will not do business with them ever again.

      ReplyDelete
    70. I pay in full every month, but my rate was raised to 14.99% and my credit score is 812! i'm not closing the account because i've had the card for a long time, but it still infuriates me that *i'm* being punished for the situation in the world financial markets.

      i didn't buy a house i couldn't afford, i don't live beyond my means, and i pay my bills on time and in full every month, yet i'm the one who is deemed worthy of a rate increase.

      ReplyDelete
    71. Anon@10:59am, thanks for the comment, pal. It's amazing how badly Citibank is handling this. Customer for 10 years goes from 3% to 18%? Unreal. Why not do what Nordstrom did? It essentially raised rates by about 4 percentage points.

      It sent a nice letter to all of us, explaining that economics conditions were at the root of the rate hike. All 2 million customers were being affected, Nordstrom said. Stick with us, Nordstrom said.

      That's the way you handle biz.

      Citi could learn a thing or two.

      ReplyDelete
    72. Anon@11:00am, it sounds as though you and I have similar profiles. But your score is 26 points higher than mine! If a customer with an 812 FICO isn't safe, just who is?

      Also, I won't be closing my account either. Simple reason: I have a large limit. I'm using that limit to help with my overall utilization. I won't be using my card as much (but I will keep it active).

      Thanks for the note. It's much appreciated.

      ReplyDelete
    73. I didn't read every comment so perhaps someone already pointed this out, but it seems to me Citibank is getting rid of it's least profitable customers. People who pay on time, don't carry a balance (or only a small balance) have high credit scores simply don't make Citibank much money. They're getting rid of the low profit customers in favor of the people with worse credit since they make much more money on them.

      Buzz

      ReplyDelete
    74. BTW, if what I said is correct, doesn't that point out just how asinine the credit card business model really is? The worse your credit, the better customer you are.

      ReplyDelete
    75. I disagree Buzz..I posted earlier this week. I got the letter too, I have a pretty measly credit score - 636. I have a available credit of 25K on my Citi Platinum card, of which 17K is on the card. I always pay near double the min. payments, but I do carry big balances. I always pay ontime, never missing a payment. It is directly drawn form my checking account each month. I had a APR of 6.7%. They raised it to 14.99% min. So, seems like they are not discriminating and this terrible treatment is across the board. I opted out, but, they will still make money off of me for a while..
      April

      ReplyDelete
    76. Buzz, thanks for the comment. I've been on top of this story since it hit. Citi is seemingly going after everyone. Large balances? Check. No balances? Check. Mid-sized balances? Check.

      Also, if you think about it, Citibank really has no power over those who carry little to no balance. The APR hike is of no consequence. So if that was Citibank's thinking, I'd argue that they make a mistake there as well.

      Buzz, I appreciate the comment, pal.

      ReplyDelete
    77. Let me add: high FICOs? Check. Low FICOs? Check.

      No one is safe, which is why I don't buy the 20% figure being used in the media.

      ReplyDelete
    78. But what difference does any of this make, at all? It doesn't matter if ever dissatisfied, frustrated customer cancels their account, the company is already recieving billions in taxpayer funded bailouts. They're not gonna go out of business no matter what we do. They can continue to lie to and scam their customers, while still taking our money, whether we pay it voluntarily in higher credit card fees or through taxes. Thanks a bunch Congress.

      ReplyDelete
    79. John, I know what you're saying. But this is the thing: that bailout money will eventually get spent. And one day Citibank will needs its loyal customers again.

      When they need us again, will we need (or want) them again?

      These short-sighted moves don't bode well for companies like Citibank. As I mentioned earlier, Citibank could learn a thing or two from Nordstrom, which recently hiked rates across the board.

      See my story on that here: Nordstrom Raises Interest Rates (story link here).

      John, thanks for the note.

      ReplyDelete
    80. Well if people across the spectrum are getting hit, then my comment doesn't apply. :-)

      Buzz

      ReplyDelete
    81. Buzz, may not apply, but we appreciate all comments here. Still trying to figure this stuff out.

      Indeed, Don Surber, a blogger, pointed to my story this morning. He said this:

      "I have got news for him: He’s a lousy customer. He does not borrow much or pay much in interest rates. Citigroup is culling the herd of non-borrowers — CINOs — Customers in Name Only.

      That is good business.

      CINOs clog up the computers. You have to send them monthly statements for their $0 balances. They generate $0 revenues.

      A sound business practice is to place them on the iceberg and let them drift off to sea."

      He thinks that a lot of us are being let go (or seeing a rate hike) because we don't generate enough income for Citibank. In my case, he'd be wrong. I still use the card each month -- I just refuse to carry a balance. I generate merchant fees, which goes straight to Citibank's bottom line.

      Don's post: http://blogs.dailymail.com/donsurber/2008/11/26/citibailout/#comment-276111

      ReplyDelete
    82. Citi is just sending folks like me off to transfer their balances to other cards. So in exchange for a higher rate for me (got my letter), they'll be getting a whole lot less of my $$$ in the end.

      I won't cancel my card, just put it away and pull it out to charge something for no more than $5-$6 about twice a year (keeps my credit looking better than canceling the card would - and will make me feel all warm and fuzzy knowing it will now cost them MORE $$$ than they'll get from me to administer my about-to-be-barely-active account).

      ReplyDelete
    83. Anon@12:45pm, precisely. Those who have options will simply transfer balances. Those who do not have options, will opt out.

      I won't be closing my card either. I'll continue to use the relationship. Citibank uses its customers, I'll use them as well. The card helps my FICO score.

      Thanks very much, Citibank. The relationship is working out just fine.

      ReplyDelete
    84. One has to remember that customers who carry no balance and seldom use their card are NOT good customers from the issuer's point of view. They cost the company money to maintain their accounts and cards.

      Good customers are those who maintain big balances, pay lots of interest, are occasionally late, and are occasionally over balance. Granted they are more at risk to file bankruptcy, but that risk is more than made up by the fees and interest they pay.

      With the government helping out with the risk management, the high balance customers are more attractive than ever, so the bank can afford to chase away all those customers with no balances, or to raise their rates so that the minimal interest they pay actually compensates for the costs.

      ReplyDelete
    85. If you play with snakes long enough, you're gonna get bit.

      Cut 'em up...pay cash. FICO is pointless. We'll wake up soon and wonder why we ever cared so much about friken' FICO

      ReplyDelete
    86. I suspect that the cardholders with better scores will be getting the rate hike because they are the ones that can afford to pay it. If they double rates on people with poor credit ratings it would most likely spike their collections and bad debt accounts.

      I'm positive that this is just the first in a long line of companies that will be increasing the cost of borrowing, especially for unsecured debts. I also wonder when the demand for payment in full letters will start coming. Another infrequently read potion of cardholder agreements.

      JW

      ReplyDelete
    87. Anon@1:01PM, I think I'll keep my plastic. No point in messing with my FICO score.

      Also, I know that yours is a general comment, not aimed at me specifically. I imagine you're really talking about people who carry balances and are now seeing their rates climb substantially. Those are the people I worry most about.

      ReplyDelete
    88. Russ, you're right about that. Customers who don't use their cards often -- and who pay in full -- are not profitable customers. They're good customers in the general sense of the phrase, though. But they're not profitable (and hence not valuable to Citibank).

      That said, if you do pay in full, but also use the card regularly, you should be worth something to Citibank. That's because you are generating merchant fees for Citibank.

      Seems American Express has lived off that model just fine for years.

      ReplyDelete
    89. I had my moment with Citi about 5 years ago. I had been a cardholder for about 20 years with a credit limit of $35K. Usually paid my card off, but at this moment I had let some expenses ride while selling my house. The house sold, I paid off my card in full.

      On a business trip to South Carolina, try to charge something and am told I had no available credit. Again, had just paid the balance off and thought I had a $35K limit. Call the company, am told that my new limit is $600. $600!!! No notice, no nothing. Like yours, my credit score is (and was) upwards of 750.

      I wish the govt had let the SOBs go out of business. I repeat this story every chance I get just to remind people what a lousy bank Citi is. Let 'em rot.

      ReplyDelete
    90. Anon@1:02pm, you're referring to a call notice on the entire debt. There are some card agreements that actually allow for that (as you alluded to). Those clauses, though never implemented, sit in our agreements. You never know. Maybe some day card companies will actually opt to use them. Nothing would shock me, even if I think that's a long shot.

      As for those who carry no balances, this rate hike has zero impact. It's those who carry balances that have to make a choice. They either opt out or they accept the rate hike.

      Many of my readers have opted out.

      ReplyDelete
    91. The Credit Cardholders Bill of Rights would change a lot of this, Anon@1:09pm. Which is why I think we're seeing these preemptive moves now. The card companies are jacking their rates in anticipation of legislation that is card company unfriendly.

      ReplyDelete
    92. Didnt read all of the posts. But, if citi is raising rates across the board, will it lead to more delinquencies?

      ReplyDelete
    93. Anon, here's the thing: there is an opt out process. It will look your current rate in. So, I would argue that if you opt out, you're in no worse trouble than before.

      It's those who do not opt out that take their chances. I imagine some people will throw away their notices without even reading them, too. Those customers could get hammered.

      More delinquencies? It just depends on who does and does not opt out.

      ReplyDelete
    94. I just got a Citi CC with a 0% balance transfer offer good for 1 year.
      I was going to move some of my outstanding balance to this new card.

      Does any of this rate hike change the offer???

      Thanks,

      ReplyDelete
    95. Anon, these hikes do NOT impact promo offers. If you have a promo offer, at a lower rate, you're fine.

      Citibank is only going after standard purchase rates.

      Your 0% deal is locked in until it expires (or you default or do something crazy to unlock the rate).

      ReplyDelete
    96. I got the rate increase notice last night. My rate was going from 8.99% to 15.99%. I carry a balance monthly and always pay on time. I'd think I'm their dream customer since I just finished grad school and I'm still trying to pay the card down, so they get interest on me each month.

      I called immediately and told them no way were they going to increase my rate so much. I didn't want to opt out to force cancelling my card when it expired and if they didn't work with me I'd transfer my entire balance to another card and they'd get no future interest from me. The rep passed me to his supervisor and he offered me a 7.99% rate (lower than my current rate) for 9 billing cycles then revert to APR offered in the mailed notice. I complained that that sort of tactic is slimy since I wouldn't get written notice in the future and they'd just jack it up.

      I took the deal. I'll just have mark the date on my calendar and watch for the increase and keep calling each year to renegotiate the rate until I pay the thing down. BTW I put both of my credit cards in the freezer this morning to eliminate the possibility of small impulse purchases that slow down the repayment process.

      ReplyDelete
    97. William, thanks very much for the comment. Glad that you shared it.

      Maybe some of my other readers will call in and demand the same sort of satisfaction. Nice tip.

      As for your situation, you should be the dream customer. I'm certainly not their dream customer. I don't pay interest on a monthly basis. I do generate merchant fees, though. So Citibank wins with both of us.

      Pay that card balance down and move on.

      Congrats on finishing grad school, too. Great accomplishment.

      ReplyDelete
    98. I had problems with Citibank back in the late 70s. At the time I realized that the "C" in Citibank is pronounced like the "c" in delicious. They evidently haven't changed their ways.

      NY Andy

      ReplyDelete
    99. I think a lot of people are missing Citi's purpose here. What Citi is attempting to do is start reducing its total outstanding liability vis a vis its cardholders. To that end it wants FEWER cardholders. The 20% number is the target that Citi is looking for for total reduction in liability by reducing the cardholder base.

      They aren't picking and choosing 20% they are picking all of them and hoping that 20% opt out or leave for another card company.

      ReplyDelete
    100. Anonymous 1:01 here again...No I was speaking about everyone, not just those in over their head. If you can pay off your balance every month, you don't need a credit card, you need a debit card. If you mess around with credit cards, you can't get upset when they treat you like crap...the numerous stories on this blog are testament to that. Why would you fool with them ifyou have th $ to avoid them.

      ReplyDelete
    101. Anon@5:46pm, I'd rather shift the purchase risk to the credit card company -- rather than to my bank account. If my credit card is compromised, the card company assumes that risk.

      If I use a debit card, and I am compromised, I am exposed. Granted, you'll eventually get the money replaced, but how long will that take? Banks can take up to 10 days to replenish those funds (after it has done an inquiry).

      There are other reasons to use cards as well (such as rewards, etc.). You and I just differ on philosophies here. And I imagine that we would just agree to disagree at the end of the day.

      That said, I don't think you're a dope for using debit at the expense of credit. That's what works for you. I'm not about dogma here. I do what's right for me. I know my readers do what's right for them.

      Thanks for the comment.

      ReplyDelete
    102. JohnMc, very well could be their strategy. However, that's not the message that was conveyed to the media. You're reading between the lines (which I am all for), but it's a guess on your part. It's as much of a guess as me saying that Citibank is targeting every customer with these rate increases.

      I do appreciate the comment, though. Just more to think about.

      ReplyDelete
    103. Quick follow up: John, it does make sense, though. I am not discounting your comment. Clearly, Citibank wants to reduce its exposure. This is a great way to do that. It will pare down its membership roll as a result of this move.

      It will be interesting to see what Citibank looks like on the other side (down the road).

      ReplyDelete
    104. I am a Citi-Gold customer. I have a mortgage with them, checking, savings and money market accounts. I've been a customer for about 7 years.
      I did not get a separate letter in the mail, my notice came with my last bill. I would not have known about this unless I read this blog post since I usually just pay my bill online via a transfer.
      I PIF each month. Current balance less than $300.
      FICO score 803 (I just checked at Equifax).
      I got notified that my purchase APR will be prime plus 12.99% with a minimum of 18.99%.

      Guess I will be accepting the next credit card solicitation that comes my way and quit using my Citicard.
      Will give them a call right now to let them know that I am not happy.
      Jan in CA

      ReplyDelete
    105. Jan, thanks for the cautionary note. So some people are not getting these letters separately. You got yours with a bill.

      Was it hidden in there? You said that you just found out about the increase via my site. I take it that you then looked at your bill to see if it was in there?

      ReplyDelete
    106. I just called Citi bank re: my card. The initial rep admitted that ALL Citi cardholders were being notified re: rate increases. I explained my FICO score etc and asked why I was being given such an outrageous rate; I mentioned that other cardholders were being given different rates (I quoted what I saw on this blog). She could not explain it other than to give the canned speech about changing economic markets etc. I told her that as a taxpayer that I was now paying her salary. I asked for a supervisor. He too couldn't rationally explain why my rate was so high - had his canned speech. I told him to cut the BS and explain based on my FICO score etc. He could not give an explanation. He did note that I paid my account in full each month and said that I was not being charged finance fees. D'oh! I then explained that I just had surgery and may be off work longer than expected and needed to have a line of credit available. With much discussion I was able to get him to agree to reduce my rate to prime plus 8.99%.
      Jan in CA

      ReplyDelete
    107. Jan, be careful about telling these people about your surgery, etc. That conversation could have ended badly. Could have also receive a nice credit limit decrease for your troubles. Citi might have heard: "out of work. No income."

      Glad it worked out for you. These folks are looking out for their bottom line; not yours.

      Thanks for the comments. Nice to see your name around this site. Hope you find stories that are of interest to you.

      Take care.

      ReplyDelete
    108. Yes, the notification was hidden in with the bill. The bill came earlier this week and I had not opened it yet. After reading this blog went and opened the statement to look for the notification. Otherwise may not have seen it at all.
      Jan

      ReplyDelete
    109. Now that is troublesome, Jan.

      Just imagine if you had been someone with a hefty balance. This rate increase could have had a terrible impact on you.

      You pay in full, and maybe you would have figured it out before January 31, but someone else might not be so lucky.

      Thanks, Jan.

      ReplyDelete
    110. EVERYONE IS GETTING THE RATE HIKE... NOT JUST 20%...EVERYONE IS.

      ReplyDelete
    111. This week I shut off our B of A Master Card.

      I had been w/them for 12+ and was a good customer; I made my payments on time and even kept a zero balance up until this past year when I really needed to use the card.
      First off, B of A DOES NOT send a bill every month though they claim they do - this adds to the claim that people are "late" on their payments. Second off, B of A raised our rate from a 13% in 2006 to a (ready for this folks???) a 28.99%!!!

      Sean
      Sun City, CA

      ReplyDelete
    112. Anon, sorry to hear about BOA assessing you their default rate.

      Also, when customers don't carry a balance, lots of card companies do not send a statement.

      ReplyDelete
    113. Anon, it sure looks as though everyone is getting a rate hike, but it's probably not EVERYONE. Maybe a small minority is not. In fact, I'm thinking the rewards cards may not see an increase -- since those rates are already so high.

      Thanks for the note.

      ReplyDelete
    114. Watch out with BoA credit cards they all have the 2 cycle balance calculation. If you carry an outstanding balance, you need to pay in full for the current month AND the previous month in order to get the grace period of no interest on new purchases. They quietly added the "and the previous month" buried in their terms about 1-1/2 years ago.

      ReplyDelete
    115. Anon, you are mistaken.

      BOA does not do 2-cycle billing. Show me an application that says they do 2-cycle billing. BOA does Average Daily Balance (including new purchases). It doesn't say "previous month."

      You might want to read Bruce Hammond's testimony to the Senate last year. Note his comment about two-cycle billing. Here's the quote: "Some lenders calculate finance charges on purchases using a method called double-cycle
      billing or two-cycle billing. Bank of America does not now —- and never did —- engage in double-cycle billing or two-cycle billing."

      Testimony was given on March 7, 2007.

      ReplyDelete
    116. I do believe that MBNA used to do two-cycle billing before it was acquired by BOA, though.

      ReplyDelete
    117. Also, Discover and Chase recently dumped two-cycle billing. Wamu, though, still does do two-cycle billing. I imagine that practice will be killed once Chase fully controls Wamu's card operation.

      ReplyDelete
    118. Well here's an observation for you. For years now we have heard record profits for theses companies. Now it seems they sqandered them and are going to charge you for their mistakes. And charge you not once but twice. Remember that bailout money is also yours. So you have it in your grasp to affect the revolution in this country so many think is overdue, but would never do so violently. Let's all just default simultaneously and set the terms for a change. These guys have been effectively abusing us for years and we could hit back with a little organization. Anybody else (who owes them $10,000) ever think about this?

      ReplyDelete
    119. I am sure that many people have thought about defaulting and sticking it to the Man. But then I am sure that people think about the ramifications of such a decision. If you don't cripple the industry, and still need credit afterward, you'll have a credit record that reflects your late payments and defaults for seven years.

      Now, if you have no plans to use to attain new credit during the next half-dozen years or so, I think your idea might work.

      However, for those who might need credit, and think that defaulting won't put these companies out of biz, it's not worth the risk (or harm to the credit report).

      So, yep, I think people have thought about it.

      But most won't do it.

      ReplyDelete
    120. Perfect idea!Nice punishment for greedy banks.I like it:)

      ReplyDelete
    121. If anyone does it, let me know how it works out.

      Thanks.

      ReplyDelete
    122. People, please!

      Credit Card Companies make next to nothing on people who don't carry a balance, and whose utilization is very low.

      Thus, the customers with the best credit scores, lowest utilization and minimum balance carried will be given the highest rate increases precisely because those are the people they need to get more profit out of. They may very well be LOOSING money on you, which is why they are offering to close your account.

      The company makes money on carried balances that they can charge interest on, as well as fees. If you never carry a balance, and you have no yearly card fee, you are not a good customer (good, as in, "we make money off of them"), you are a BAD customer and they WANT to get rid of you.

      ReplyDelete
    123. Anon, think about what you just wrote.

      People who carry NO balances.

      Whose utilization is low.

      Best credit scores.

      These people need higher rates so that card companies can make more profit????

      Do you realize that people like me, with little utilization, no balances, and high scores, are not impacted by these rate hikes? We don't carry balances, so there is no money to make from us with higher rates. My interest rate could be 10000%. I don't carry balances. Interest rates are irrelevant.

      Which is why I do not have to opt out of these rate increases. My account is staying open.

      Citi isn't getting rid of the person with no balance. Citibank is getting rid of people who carry balances -- the so-called "good" customer in your scenario.

      ReplyDelete
    124. Indeed, the customer that is carrying a balance MUST opt out -- or they will be paying interest at a higher rate.

      Now do you see why your postulation is flawed?

      The customer who doesn't pay interest, isn't opting out of this increase at all. Therefore, the customers you are calling bad are unaffected by rate increases. We'll just continue to pay our bills in full each month. And we will continue to ignore our interest rates.

      But that customer with the large balance will be opting out -- and eventually leaving Citibank.

      In the end, all of the "good" customers will be gone.

      All of us "bad" customers will remain.

      ReplyDelete
    125. Another newbie here.
      Just got our notice today, we're not like most of your respondents - we are carrying a balance, and have a fair credit rating. Our rate was hiked from 7.99% to 24.99%. I would have appreciated receiving the notice before I went out and shopped on the card this morning, but that's life I suppose. It has at least spurred me to make some returns tomorrow!
      We are simply going to opt out, and pay down the balance. Our initial thought was to transfer the balance to our other cards and simply leave the Citibank card at zero, but my husband is probably right in guessing that Citibank is hoping people will do this en masse - they get a fast cash injection and reduce their risk at the same time.
      At the end of the day Citibank is not really going to lose that many customers, people don't just shut down their accounts these days no matter what the terms are. They will simply lend less, and earn just as much through the probably large percentage of people who won't pay any attention to this until it's too late.

      ReplyDelete
    126. I appreciate the note.

      I think you'd be surprised by how many people will opt out of this rate hike. Many can't afford not to opt out. Your situation is a great example.

      At 7.99%, you can handle balances just fine. But at 24.99%? Get out of town. You have to opt out. And, as with all who do opt out, these account will eventually be closed.

      My concern also centers around those who either ignore the letters or never see them. These people could, assuming they have large balances, get thrown right off the bridge.

      ReplyDelete
    127. I don't always bother to read the 100 odd pieces of junk mail that every bank in the country sends me each week before shredding it, so I was lucky to read this at all. Called, got the same spiel and got online to check it out. This site has really helped, thanks for your hard work.
      I had read today that the credit card bubble is next in line for bursting. With tactics such as these it's not hard to imagine - the amount of people who are going to declare themselves unable to pay their credit card debts is going to skyrocket. Sound familiar?

      ReplyDelete
    128. Oh and I meant to say that I agree, people will opt out, but I meant in my earlier comment that they would do this rather than transfer their balances and close their accounts in protest.
      Luckily for me Citi just had to give me a new card due to some merchant data breach or other, and it's good for another 30 months. Pretty sure I can replace my credit line within that time frame!

      ReplyDelete
    129. Anon, sweet. Glad that you just got a new card and that it expires in 2.5 years. I am sure you'll be just fine. Pay whatever balance you have (if you have one), and be done with it.

      Are you opting out?

      And glad you found my site.

      ReplyDelete
    130. This is interesting. I just got a rate increase letter and searched to see what was going on and found your blog.

      It was a bit of a mystery to me because I have a balance of $1,000 or so (limit around 15,000) and my credit score is in the mid 700's. In fact it is only recently that I have a balance at all with them. I've had this card for 5 years. Anyhow, the rate is going up approximately 6%.

      I'm not going to bother opting out. I'll just pay down the balance over the next 2 months. I would close the card, but its one of my older credit accounts.

      I won't stay with them long term after this though.

      ReplyDelete
    131. Anon, thanks for the note. Will be interesting to see how many customers like you -- with a low balance -- decide to dump Citibank anyhow. After all, you're accepting the new increase (as am I) but you won't be staying with them long term, you said.

      Will be interesting to see how many people follow your lead.

      Thanks for the note. And thanks for visiting the blog.

      ReplyDelete
    132. I juat got my letter today and called to ask why..I got a blurb about a company decision due to the economy. My current rate is 9.99 and they said it would now be 15.99%. My FICO is in the high 780's and we have never paid anything let..with them or any other creditors.
      I am not happy. The rep lowered the rate to 12.99% which is better, but I still may opt out.

      ReplyDelete
    133. Thanks for the note, Anon. I continue to get visitors to my blog with stories just like yours.

      ReplyDelete
    134. I posted this in another thread, but I realize that not every person will see that thread, so I am posting this in all of my active Citibank threads:

      Here is the language:

      "If you opt out of these changes, you may use your account under the current terms until the end of your current membership year or the expiration date on your card, whichever is later. We will close your account at that time. You must then repay the balance under the current terms."

      This is where my law school training comes in handy. The first sentence refers to current terms. These are your current terms -- before an interest rate hike. So, they've defined "current terms" for us.

      Now, go to the third sentence. Citibank is saying that you will have to continue paying down your balance -- even after the card is closed. You must pay under the current terms. Having already defined current terms, we know that it means current terms -- before the rate hike.

      If Citibank tried to weasel out of that contract language, I can assure you that the consumer would prevail. It could be called ambiguous at best. And the court would weigh the evidence in favor of the consumer -- and against the drafter of the language (Citibank).

      So, my thought is that your current terms are locked in -- even after the card is closed. A lawyer wrote that opt-out clause. "Current terms" has the same meaning throughout.

      ReplyDelete
    135. Just got some more incremental information from Citibank (I called and talked with a supervisor).

      Here's the deal:

      If you opt out, you will continue to have your current rate (prior to any rate increase). Moreover, your current rate will -- and can -- fluctuate with prime or LIBOR. Thus, even if your account is closed, you'll still see small fluctuations in the rate, because of prime or LIBOR.

      Therefore, if you have a 6.99% rate right now, and you opt out, your rate will remain at 6.99% even after you close the account. But your current terms also allow for small fluctuations tied to prime and LIBOR. So, your rate could move higher OR lower, depending on market fluctuations.

      NOW, moving to something else I just learned: if you opt out, but you miss a payment, go over your limit, or do anything wrong with the account, your rate could jump to the default rate. Again, your current terms allow that. And your opt-out terms would be no different.

      ReplyDelete
    136. My rates went from 13.99% to 19.99% despite no late payments since opening the account. I was told that everyone's rates are going up. So much for the 20%. It's only my fourth oldest card so I had no problem telling them I could get rates 10 percentage points lower.

      ReplyDelete
    137. Anon, thanks for the comment. Just another reason why I wonder about the 20% figure.

      FYI, I have been told that more customers will be receiving these letters. Apparently the letters are being staggered. There was already a first wave of letters. The second wave should hit soon.

      It's being done this way so that customer service reps are not overwhelmed by the crush of phone calls.

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    138. 6.65% to 24.99% here; I opted out. They told me if I decide to stay with them in Jan. 2011, I may be offered my original rate.

      The rep did say "across the board"

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    139. I have heard different things. Across the board. Certain cards targeted. Certain customers whose rates are below X.

      As you can see, there is no consensus here.

      I can only say that I think it's above 20% of customers.

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    140. CitiBank is not telling the truth. I have an 810 credit score and the letter said they were going to raise my interest rate from 6.74% to a minimum of 14.99%. When I pointed out that I have an 810 credit score, the guy told me that they were going to raise the rateson everyone because of operating costs. When I mentioned that a 50% increase was a bit drastic, he just said they needed the money bad. I told him that they were just going to chase away their customers.
      I chose to take the "opt out" option, and was told my interest rate will stay at 6.74% until the card expires - which is in 11/1/2010..hee hee I won't use Citibank anymore on shear principal...those weasels!!!! Steve

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    141. sorry - I guess that is a 100% increase - even worse...Steve

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    142. Steve, CNN would like to talk with you. They're working on a story about these rate hikes. You'd be the perfect person to tell the story. Your FICO score is over 810. If interested, see this story:

      http://www.creditmattersblog.com/2008/12/citibank-credit-card-customers.html

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    143. Can someone tell me if the balance is then owed in FULL and at the time of when your card expires if you chose to opt out? OR you can just continue paying it down but will not recieve a new card?
      Also, I have a 1.9% fixed rate balance that I have been carrying for a few years on the card, they can or cannot mess with that? Thanks!

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    144. When the card expires -- and the account is closed -- YOU DO NOT have to pay the balance in full. You'll simply continue to pay down your balance as you always have.

      Your fixed-rate will be locked as long as it is a for-life deal. Otherwise, it will rerate to your current purchase rate (the rate you are locking in by opting out). Does that make sense?

      You have two rates associated with your card right now. You have the promo rate (1.9%), which looks like a "for life" deal. And you also have a purchase rate as well, which is the rate that most of us are locking in -- since we don't have promo rates.

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    145. A little more clarity. If your 1.9% rate was a promo rate, that expires in four months, for example, opt out would not prevent that rate from moving higher when the deal expires. When it expires, it goes to your current purchase rate (whatever that is right now).

      If your 1.9% offer is "for life" then you are fine. If you don't opt out, your rate will change once you have completely paid off your balance (the balance that's currently at 1.9%). If you do opt out, you'll never see a different rate other than 1.9% from here on out.

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    146. Thanks so much, the 1.9 was for life and the only thing I have on the one card, thank goodness! Altho I have another one that I used for business inventory and cant really opt out or I will not have that card to buy work related things on, basically my small business will be no business:( Ugh...they dont make it easy to get a personal loan either with no collateral I am sure? I am ready to go to a lower interest on all my business debt but not quite making enough to be too impressive to a bank with all my write offs, it still looks like i am just barely getting ahead...

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    147. I think they might have meant 20% a month! I got a letter last week that they are raising me to 19.99%!!!!! I hardly ever use the card and do not carry a balance. The same week I received a letter from them pre-approving me for a Citi Advantage American Express card with 13.99%. What's the deal?
      I decied to opt out. I never carry a balance, but it's the principle. I wish that everyone would opt out - you can always get another card from somewhere else. I'd like to see Citibank go out of business.

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    148. I've googled everything I could think of related to this Citi rate increase and I have to say I don't get it. I've been with Citi several years and I'm a responsible user of credit my whole life (57yr old.) I keep purchases controlled and have never exceeded a balance of 1800.00 and that was rare. Most often it would get to 1000.00 or 1200.00 and then I pay it down paying 4 to 5 times the minimum payment until I get it well below 1000.00-- right now I have a balance of about 500.00--- I opted out --- I checked my FICO score at 813 today --something is wrong with a company that doubles your rate for no good reason,(there isn't a good reason is there) isn't this the kind of thing they do to people that have been delinquent and irresponsible? I would think I'm the kind of customer they make money on even at 7.99% --am I wrong??? For me the raise from 7.99 to 14.99 feels exploitative and I won't be taken. I never missed a payment with anyone my whole life and I take it personally and will never consider Citi again. I could have accepted 1 to 2% maybe as reasonable given the economic woes but double ---no way!!!
      What an insult with all the money we the taxpayers are pumping into these financial institutions and they they turn around and want to sock it to the responsible folks like myself that are bailing them out. So I will either pay the balance off before the card expires or transfer the balance to a new card. With a FICO score of 813 I hope to be accepted by either of two cards I've applied for Simmons or Pulaskibank--the only two I could find after several hours of searching that offer fixed rates (7.25 and 8%) It appears that fixed rate cards are few to be found. I know as Citi just demonstrated that they can change your rate to what ever they like if they choose.
      I feel uneasy about variable rate cards. Anyone have any thoughts on sensible alternatives?? There seems to be allot of cards with variable rates in the 7+ to 9+ range --but what if the prime is back up to 5,6,7,8, are you then looking at interest on your card being 11 to 15 or 16 percent or higher?? I wounder if its a scheme to get everyone into variable rate credit and then everyone will be paying high interest-- excuse me but I'm getting cynical and don't trust the financial wizards.

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    149. Our Congressional leaders voted for a bill that gave irresponsible bank managers hundreds of billions of dollars with no strings attached! It’s been said that it’s harder to apply for a credit card at Sears than for a troubled bank to get billions from the TARP funds! Now it is up to our Congressional leaders to correct what they’ve done!

      Here, Citibank was given $20 billion while its bad debt was guaranteed up to at least $300 billion! How does Citibank respond to the People’s bailout? By ordering a $50 million luxury executive jetliner and by raising credit card interest rates across the board to all its customers!

      My rate went from 5.99% to 14.99%! A nearly tripling of my rate! And this, it would seem, is common place as shown by the countless blogs on the net with irate taxpayer-Citibank customers, on average, experiencing a tripling of their interest rates.

      There is nothing worse to a stagnating economy, which will ultimately depend on consumers to turn it around, then having the largest credit card provider TRIPLE its interest rates! For example, it’s one thing to buy a product knowing you have a 5.99% interest rate. It’s an altogether different thing knowing your rate will be 15%! In fact, many customers rates are going to 24.99% or even higher!

      Our government is now a large shareholder in Citibank! With this shareholding interest, it’s about time our congressional leaders and president take action!

      If Citibank is part of the solution to turning around the recession, great. If, as it appears now, Citibank is a core part of the problem, they should and in fact MUST be allowed to go under and file for bankruptcy! Even if their largest shareholder is from Saudi Arabia!

      Tristram Buckley, Esq.

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    150. This is still going on! We need to get the national news on this crap. My rate went from 7.9% to 24.99%!!! And I've got a "great" credit score, according to all three agencies, who also don't have a single blemish on my credit history.

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    151. Anon, it did get some national news in December:

      http://www.creditmattersblog.com/2008/12/cnn-interview-reaction-comments.html

      Check it out.

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    152. umm yeah 3 points my &*&, Mine went from 5.99 to 14.99 and I called up and they said I could opt out so I said lets do it now. They also said it would show up on my account in a day or two. Thats the last citi gets from me. I am paying them off and writing them off. They are already getting bailed out by my tax money no reason I can see i should give more. I personally think they should all go under.

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    153. I know the customers will remember which bank cards took advantage of this situation and which treated people responsibly. Hope they make a lot of money now because when things turn around and they will, they are done. Will be begging for customers. Raising rates on customers who are never late may just people over the top and then they won't get their money anyway. Stupid business practices. They will lose in the end.

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    154. Anon, you are right. Lots of customers need these banks right now. But eventually they won't. When they don't, they'll remember the banks that treated them well and those that did not.

      It could be interesting.

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    155. This is just amazing - I just had a 90 minute phone conversation with Citibank over the fact that my interest rate went from 5.99% to 19.99% seemingly overnight. I am one of those customers that did not notice the letter regarding rate hikes and instead noticed the increase while reading my most recent statement - my own fault I know but still unacceptable. The customer service rep informed me that a letter was sent out and that I had the option to "opt out" but that option has since expired - I explained that I obviously overlooked the letter because if i had seen the letter why on earth would I opt to pay 20% and why would I be calling!?! I have a 780 credit score, actively use the card but rarely carry a significant balance, been a cardholder for 13 years without a single blemish. After about an hour on the phone and 3 different customer service reps, the best they could do was "lower" my rate to 13% - no thanks, my rate was 5.99%. So, the end of the day it was very easy decision for me to make in putting the card in the drawer. Do they really think that by stinging me with this insulting increase in rates that I would even for one second consider remaining a cardholder with them after they tripled my rate?!? Not this guy! But it irritates me how stupid this decision is that they made - especially since the taxpapers just pumped hundreds of millions into this lousy company because it's "too big to fail" but will ultimately fail anyways if this type of mismanagement continues. There has to be more to it because this makes absolutely zero business sense to me. What are they going to do when the economy turns around and looking to return to profitability by growing it's cardholder base? Good luck with that after alienating your most reliable and longstanding customers... What is pathetic and sad is that there are many people out there that do not have the financial capability to just decide to cease doing business with them and this will just exacerbate the nations economic woes. As for this 13 year cardholder, i'll wake up tomorrow feeling good about the fact that i have the financial freedom to "opt out" of Citibank's deceptive games and will share my experience with everyone I care about. No reasonable person would decide to do business with a company that acts this way. This needs more national attention!

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    156. Anon, this got a lot of national attention in November and December. Here is the piece that CNN did.

      http://www.creditmattersblog.com/2008/12/cnn-interview-reaction-comments.html

      Thanks for your thoughtful comment, by the way.

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    157. Thanks for the link, good stuff. Needs even MORE coverage!

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    158. Anon, I feel like I have been living Citibank coverage for months and months.

      Here's my index of stories I have done.

      Feel free to check them out.

      http://www.creditmattersblog.com/2008/12/all-in-one-place-citibank-coverage.html

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    159. Thanks again and keep up the good work! I fully support everything that you are doing to expose this nonsense.

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    160. You are welcome.

      Thanks for your comments earlier, too.

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    161. We received our letter 2 days ago, took a 11.9% rate to a whopping 29.99% effective November 30, 2009. Long history, great FICOs, carry a balance but always current. We opted out but the meta indications of this are pretty scary...

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    162. I am furious with Citibank. I have been a cardholder for 8 years and have always made my payments through direct withdrawl scheduled one week prior to actual due date. I have never been late and my interest rate went to 29.99%! I contact Citi and was told my account was in default. I recontacted them to ask why it was in default and they said then that it wasn't in default that I was sent a notice of the increase. I questioned why it was increased again because my account was in good standing and was then told it was raised due to "cost of doing business". I again asked why my interest rate was increased and was then told that it was the lowest available. I was under the impression that if I opted out that it would hurt my credit score... Bank of America did pretty much the same thing to me the exact same month. Is there anything I can do about this?

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    163. I've been a citi card holder (AA advantage) for over a year. And I have to say this is least consumer friendly card I've ever used. The entire payment procedure is designed to trick you into paying fees and charges. It doesn't matter you've been a customer with them for a long time or have always paid bills on time and was just late for that 1 day. They will be happy to charge you a $40 late fees with additional interest and finance charges, even when all of their competitors would take the fee off as a one time courtesy without a question. Finance charges continues for another month after you've been fined for late fees and interest. Their "automatic bill pay reminder" reminds you to pay the bill a week in advance, and guess what, it is as good as nothing. Why isn't there a "Hey-you-have-a-balance-and-due-date-is-tomorrow option? Because they don't want you to pay on time. At the end of the year, I had enough with this card and wanted to terminate it, but I was told that my card had been renewed with yearly fees, WITHOUT NOTICE. For a busy professional who doesn't have time to look over all of their bills this is a disaster. I got charged for over a hundred dollars of fees for 1 year of use of the AA advantage card. You can say it's my fault for not remembering anything, but I've been a card holder with other companies, too, and my fee bills COMBINED for the past 5 years were near 0. Sometimes using the Citi card feels like walking through a land mine. I've never seen a bank so desperate to charge the heck out of their customers. I guess they are really in deep trouble.

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