Smart SpendingSmart Spending

New Citi rates: Should you opt out?

Customers who haven't had a rate increase in two years can look forward to one now.

By Karen Datko Sep 27, 2009 2:28AM

"Brainy Smurf" was pretty well gloating when MoneyMateKate announced that Citibank is upping her credit card interest rate. "I kinda selfishly thought to myself, 'Wow, sucks to be her,'" he wrote at Pants in a Can.


Then he got his own letter from Citi. As of today, his APR is jumping from 9.96% to at least 16.99% (and 29.99% if a payment is late). What's up? He pays in full every month and he's never late. And didn't Citigroup just get a huge government bailout?


Millions of Citi customers have been getting a similar letter, although terms may vary. (American Express and others are also making rate and fee adjustments.) For instance, MoneyMateKate said that even though she, too, pays her Citi balance in full every month, her new APR is three percentage points higher than Brainy Smurf's. She added, "They get a bailout and we get a financial wedgie."


Citi decided it couldn't honor an earlier pledge made to Congress to no longer raise rates whenever it wanted. The New York Times reported that those Citi credit card customers who haven't had a rate increase in two years can look forward to one now. (U.S. Rep. Carolyn Maloney, D-N.Y., commented: "Banks appear to be repricing cards for economic reasons -- theirs, not their customers. Apparently a deal is only a deal when it doesn't cost the financial institution too much money.")



What's Brainy Smurf going to do? He's taking Citi up on the offer to opt out instead of accepting the new rates. He can use the card at the former rate until it expires, at which point the account will be closed. "Sure, they'll close your account, but I'm sorry, better credit card offers are still out there and you should look for them," he said.


"Debtmaven" got a notice too and is opting out. She wrote, "I'd been a loyal and well-paying (and debt-owing) customer for more than 12 years. Bye-bye to Citibank!"


Published Dec. 3, 2008

0Comments

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

ABOUT SMART SPENDING

Smart Spending brings you the best money-saving tips from MSN Money and the rest of the Web. Join the conversation on Facebook and follow us on Twitter.

VIDEO ON MSN MONEY

TOOLS

More