New laws are coming into place that will limit the ability of banks to raise rates on existing credit card companies, but in it’s not in force just yet. There’s still a window to play the old games, and Citigroup (C) is taking advantage, the FT reports.
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.
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.
After FT.com broke news of the hike, Citi issued a statement saying: “We have adjusted pricing and card terms for some customers as part of our regular account reviews. This is an ongoing process to ensure we offer terms, interest rates, credit lines and products based on individual needs and risk profiles. These changes also reflect the dramatically higher cost of doing business in our industry as we work to preserve the broad availability of credit.”
Anyway, banks, enjoy the higher credit card fees and usurous overdraft fees while you can get ’em. There’s a whole new agency being proposed specifically to address these products.
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