Citigroup Hikes Credit Card Rates Just in Time to Avoid New Laws

zzshitibank

Bailed-out Citigroup increased interest rates on millions of credit card accounts in the US between January and April, just in time to avoid new laws limiting interest rate hikes. The Financial Times reports:

Citigroup has sharply increased interest rates on up to 15m US credit card accounts just months before curbs on such rises come into effect, in a move that could fuel political anger at the treatment of consumers by bailed-out banks.

People close to the situation said that Citi, which is about to cede a 34 per cent stake to the US government as part of its latest rescue, had upped rates on between 13m and 15m credit cards it co-brands with retailers such as Sears.

Citi’s rate increases emerged on the day the government proposed legislation to create a new regulator with sweeping powers on consumer protection and a week after the bank was attacked by some politicians for raising employees’ salaries.

Holders of co-branded cards who failed to pay their balance in full at the end of the month saw their rates rise by an average 24 per cent – or nearly 3 percentage points – between January and April, according to a Credit Suisse analysis of data from the consultancy Lightspeed Research.

Can someone remind me why the government bailed this bank out?

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  • Nona

    What a horrible move. I hope anyone that has any type of citi card cancels it pronto. Thank God I dont have any citi accounts otherwise I would cancel them asap/

  • It’s not just Citi. Add Chase, Bank of America and the despicable Advanta who took rates to 35% plus and also canceled every small business card in the country. Every single one of these banks has raised their rates into the mid to high 20’s. And, nobody in our government will ever do a thing about it.

  • Jeff Schwandt

    One way or the other, American consumers will learn to pay cash and/or pay off credit card balances monthly. Guess the credit card companies are counting on the ol’ “sucker’s born every minute” adage to stay in business.

    This sucks for small businesses though.

  • Just in – Advanta Corp, the small business credit card lender that recently shut down its accounts for future use, has entered into two agreements with the Federal Deposit Insurance Corp., including one involving alleged “unsafe or unsound” practices that requires it to refund up to $35 million to customers. I wonder why the government didn’t go after them with RICO?