Despite Pledge, Citigroup to Raise Credit Card Rates, Blaming ‘Difficult’ Environment

The New York Times ^ | 2008-11-14 | Eric Dash

[rabscuttle385]

Citigroup is reneging on a promise it made to tens of millions of credit card customers in good times.

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.

Citigroup attributed its decision to the “difficult market environment,” suggesting that the cost of the program — on top of sharp increases in its borrowing costs and severe anticipated losses — cut too deeply into profits. The bank said the policy change would only partly offset a $1.4 billion third-quarter loss for its credit card unit. However, it declined to provide specific figures.

[rabscuttle385]

But only after accepting a taxpayer bailout!

[rabscuttle385]

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[freedumb2003]

Don’t carry a balance and the rate is meaningless.

[rabscuttle385]

*Ping!*

[muawiyah]

Let’s say you sell stuff (goods or services) to people who pay with a Citibank credit card of some kind. The interest rate they pay becomes very meaningfulto you. If it’s too high, they’ll buy less from you. Your lower priced competitor will get all the business while you go bankrupt, your family starves to death, and your creditors pay through your belongings to see if there’s any value left they can scavenge.

[org.whodat]

LOL, I thought most people had already knew you could not trust a banker.

[elkfersupper]

One has to wonder just how much longer the consumer will put up with this kind of crap.

While it is true that at least 52% of our fellow citizens are too stupid to come in out of the rain, anger over various forms of deprivation has to be accumulating.

I'm going to study what happened with the Bolsheviks.

[doc1019]

Only problem with that (I, like you, pay off my debt every month), they get a little hinkey if you don’t pay some sort of interest occasionally. I have been dropped by several credit card companies because they were not making any money from my card (interest wise).

[Right Wing Assault]

Don’t carry a balance and the rate is meaningless.

Next they will decide to tack on a monthly or annual "fee" just to have the card.

[autumnraine]

My husband transferred some debt to them just because he took their word. He is not going to be happy in the morning when I have to tell him this.

[proxy_user]

If you charge enough, they make plenty in their half of the merchant fee. It’s about 1.2%. If you charge $1000 a month, they get $144 a year out of your account.

[autumnraine]

I think 85% of the people here only see through one lens and that is not the one of business owner. It’s like nothing else exists except them, their job and their consumption. I try so hard to explain to my kids how everything effects everything. Even I don’t get most of the exact economics, but I understand the concept. And I understand that there is more to an economy than being a customer.

[null and void]

Why wait? Wake him up now...

};^)

[muawiyah]

For the most part folks evaluate any situation in terms of "where is my seat"? (I used to be involved in setting up interactive review processes for postal folks getting new buildings ~ initially everybody on the team wanted to know where his or her own desk or workstation would be).

Still, at least here they are educable. You go over to DU and you find out that they reject the notion that there's any sort of interconnectedness anywhere.

[autumnraine]

Uhhh, that’d be a no. I don’t poke the bear unless absolutely necessary. Especially to tell bad financial news. eek!

[autumnraine]

True, very true. I like that analogy too. We all have our point of view, and usually look out from that as habit I’d imagine. But at least here you have people with reasonable intellegence most of the time. Heck, I tried to go to DU after someone here told me about it and it was worse than trying to read my 12 year old’s text messages.

[null and void]

[autumnraine]

You always make me laugh null and void!

[null and void]

;-*

[gieriscm]

Don’t carry a balance and the rate is meaningless.

Gasp! You... you... you... DEADBEAT!!!

"Deadbeat" is what CC companies call people who pay their cards off in full each month so they don't pay interest. I'm a proud deadbeat. :)

[napscoordinator]

I don’t think it is as easy as that. Yes of course pay off your credit card bills every month, but I think that increase is going effect much more than just credit card bills. These banks have been raping people for years and now after begging money from the same people they are ripping off they are going to raise everyone rates...Ugh!!! Sorry I don’t agree with this and I have no business dealings with them at all.

[napscoordinator]

The FREEPER response of the week!!!! Seriously you are 100 million percent correct!!! Some here can really give Obama a run for his money in that “Arrogant title”.

[JasonC]

Borrowers pay all the costs of capital including all bad debts. Deadbeats on mainstreet have stiffed bankers for $1 trillion. Everyone is going to pay it back, twice over to cover the extra risk it created - every dime. That is a law of nature and nothing you say can change it.

[JasonC]

Nonsense. I've got 0% promotional periods, 5% credit line offers, etc, coming out of my ears, from all the major banks. And I never pay more than one month when a promo rate ends, everything else is paid in full immediately. Top credit ratings can get whatever they want. It is only overextended people that can't.

[doc1019]

Nonsense

You live my life? I have been dropped by several CC companies over the years because I paid off my balance every month. And I have an outstanding credit rating, far and above the average. Nonsense!

[elkfersupper]

I am a banker.

[rbg81]

Guess, what? They STILL make $$ off you because the merchant pays a fee to them for the credit purchase. This is often between 5-6% of the purchase price. It is a hidden tax. That is why merchants (especially gas stations) that don’t accept credit cards charge less for gas.

[JasonC]

Then you ought to know that spreads have already widened, and therefore the users of credit are paying for the increased loss rates the deadbeats have caused. And they will continue to do so. You can't rob capital and have it, they are mutually exclusive propositions.

[cpdiii]

“I’m a proud deadbeat. :) “

Same here for more than 17 years. :)

[Arizona Carolyn]

It is clear a lot of people here have as limited prism of economics as congress.

[GOP_Thug_Mom]

I know this isn't Citibank I'm talking about, but we got a letter yesterday from GE Cap. Corp. We had a deal with "one year no interest" on dental work--orginal balance was $3600. I've been paying $300 a month so that it will be paid off within that year.

The letter yesterday said that they were lowering our credit limit because of a credit report from Equifax. I showed my husband. They're are really desperate--they don't want tie up funds with people who aren't making them any money!!!

[Glenn]

Problem:

Profits bad because credit card customers are defaulting.

Solution?

Force more credit card customers into default by increasing rates leading to more government ownership.

Problem solved!