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Yesterday, we reported on how scores of people across the country had found their gas station-linked credit cards from Citibank had been cancelled. One reader, Rachel, emailed us and explained her frustration. Here is her letter in full:I received two letters by mail from Citibank yesterday. One said that because I always paid my account on time and that I was such a great customer they were increasing my credit limit. The next letter I opened stated that Citibank was raising my interest rate from the current 18.99% to 29.99%.
I had two choices either I accepted the rate hike or Citibank would honour the current interest rate until the expiration date of my current card, which fortunately was 8/31/2011, and at that time they would close my account, but I was still expected to continue to make payments until the account was paid in full. I have been a cardholder with Citibank for 20 years and was told that due to the current economic downturn the company was forced to raise interest rates regardless of credit scores and payment history. My husband and I have good credit and are making a genuine effort to get out of debt by purchasing next to nothing on credit.
Nevertheless, if I did not accept the rate forced upon me, at the end of the expiration period (8/31/2011) they would report the “closed account” status to the credit bureaus thereby giving us a negative comment on my credit report and lower our overall credit scores. While I am ashamed to admit this to you we owe $25,000 to Citibank, our choices at this time are very limited. I have made some calculations and in order to pay the balance before they forceably close my account, my husband and I must make payments of $1400 per month, this is a substantial increase from the minimum balances they require of $665 per month. I have not opted to pay Citibank the 29.99% interest. The interest rate is calculated by Citibank as the prime interest rate, 3%, plus 26.74%. Essentially meaning that today the interest rate is 29.99%, but when prime is increased so will the interest rate charged by Citibank.
Luckily, my husband and I are both employed but we have two children in college and our budget is stretched to the max as it is. How do families facing unemployed and job cutbacks cope with such devastating news? Does Citibank want to force mass backrupcy filings in order to get more government money, while still paying its CEO and top executives bonuses and other compensations? The question needs to be asked…why now????
I feel that I am being treated unfairly by Citibank and have absolutely no recourse. I am curious to know how many people have received the same notification and what rights we have as consumers. I hope you will take my story and perhaps write about another of Citibank’s abuses, perhaps prolonged exposed media attention will finally compel them to “do the right thing”. It would also be great if we could see this abuse reported on television.
Rachel’s story is unfortunately nothing new. A lot of people felt the same frustration and anger in the comments section of our earlier post:
I’ve had a standard Citi MasterCard since I was 18 years old. I recently got a notice from Citi saying “to continue to provide our customers with access to credit, we had to adjust our pricing” and that the interest rate was being jacked up to 29.99% (!!!). There’s some sort of sketchy “interest rebate” that’s intended to make the effective rate more like 19.99% but even that makes it the most expensive card in my wallet. The card will now go in a drawer, never to be used again. Good job, Citi.
Bottom line: Consumer access to credit continues to disappear, or made prohibitively expensive.
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