“Citigroup is reneging on a promise it made to tens of millions of credit card customers in good times.” If that lead-in to this New York Times article sounds a bit harsh, that’s because it is.
Citigroup once vowed before Congress that it wouldn’t raise rates until an account expired. That was in the early part of 2007. Now it’s late in 2008, and the credit crisis has caused Citigroup to go back on its promise, earning them a harsh tongue-lashing from critics.
If you’re a Citi cardholder who hasn’t had a rate hike in the past two years, you can bet that one’s coming. Customers will see their interest rates jump 3%, putting some of them over the 20% interest mark. It might be a good time to shop around for a new credit card.
On the other hand, the economic climate is making many companies do things they deem necessary to retain profitability. American Express has hiked rates and laid off thousands of employees, and some financial institutions have folded altogether. Still, Citi is finding very little sympathy.
Representative Carolyn Maloney of New York says that she understands why Citi is doing this, but she doesn’t like it. Says Maloney, “Apparently a deal is only a deal when it doesn't cost the financial institution too much money." Ouch.
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