Smart SpendingSmart Spending

Card companies up to more tricks

Citi to cardholders: Your new interest rate is 29.99%.

By Karen Datko Oct 21, 2009 5:47PM

Is there no end to the new fees, new rates and other credit card company shenanigans before new federal rules kick in and put a stop to some of their antics? Apparently not.

 

Get this:

  • Citibank on Nov. 30 is raising the variable interest rate on some cards to 29.99% APR, Huffington Post blogger Eva Norlyk Smith said. "The card has a variable APR, so the interest rate, now and forever more, will be calculated by adding 26.74% to the U.S. prime rate," she said. If you pay on time, Citi will reduce the interest charged on your balance by 10%. (That's 10%, not 10 percentage points.) Whoop-de-doo.
  • Citibank said it has "decided to close a limited number of oil partner co-branded MasterCard accounts." Those include Shell, Citgo, ExxonMobil and Phillips 66-Conoco cards, The Associated Press reports. To make matters worse, Citi sent out a letter two days before it closed the accounts, and some customers found out when their card was denied after they filled up the tank.
  • Citi will assess an annual fee of $30 to $90 on some customers if they charge less than $2,400 a year.

Citi is getting most of the focus here, but it's not alone in altering terms of agreements with customers, which is perfectly legal now. (A Credit.com survey indicates just how widespread this is.) The news just keeps on coming'.

 

Wells Fargo has informed card customers that as of Nov. 30, it is raising interest rates by three percentage points. (Unlike some companies, at least Wells Fargo had the decency not to put the blame on the individual consumers. The letter says, "These changes are not a reflection of how you have managed your accounts with us or your credit score.")

 

We've already reported on Bank of America's plan to try out an annual fee for some unlucky customers. It would range from $29 to $99. Ouch.

 

Leslie McFadden, blogging at Bankrate.com's Plastic Rap, said she asked readers what they'd do if their credit card company decided to charge them an annual fee, and how big an annual fee they would accept. She said, "Most said they would cancel their account if any annual fee was imposed."

Well said, folks. The only way to discourage this behavior is to ditch the companies that won't treat you right -- if you can. So what if your credit score dips a bit. You can fix that.

 

Leslie adds, "A recent Consumer Reports survey found that more than one third of credit cardholders have closed a credit card account since January 2008. About half of this group did so because of a change to their account, such as a reduced limit, raised rate or new fee."

 

Related reading:

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