Credit Card Blog

 I came across this press release from CitiGroup and thought that you the consumer would be interested in knowing that the credit card companies might be loosening the grip on our rate hikes and fees. Enjoy!

Citigroup Inc. said it would eliminate a widely used practice of raising interest rates for individual credit card holders when they default on other credit accounts.

Citigroup also said it would end the policy of “any time for any reason” increases in credit card rates, which have allowed credit card issuers to raise fees and interest rates in response to changes in the financial markets.

“We felt these were significant industry leading changes that could affect how we serve our customers,” said Citigroup spokesman Sam Wang.

The move comes just two months after Sen. Christopher Dodd, the new chairman of the U.S. Senate Banking Committee, held hearings on credit issuing policies, and threatened to crack down on the industry if changes were not made.

During the hearing, Mr. Dodd noted that the credit card industry earned more than $17 billion in penalty fees during 2006, a 15.5% increase from 2004. He said that consumers had become confused and intimidated by all of the hidden fees charged by credit card issuers.

Going forward, Citigroup will not increase credit card rates and fees until credit card accounts are renewed. The only reason Citigroup will raise rates and fees before an account expires, is for late payments, exceeding the credit card limit or bouncing a check. When the interest rate on the individual card is linked to the prime rate, the rate would change as the prime rate changes up or down.

“Clearly this raises the bar for the industry and protects consumers in a way that other credit card issuers do not,” said John Taylor, chief executive of the National Community Reinvestment Coalition, in a statement.

This entry was posted on Friday, March 2nd, 2007 at 10:05 am and is filed under In the News, Citibank. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.