Saturday, February 07, 2009

I hate citibank

We have exactly one credit card in our house. We make our payments on time, every month. Today we got a piece of what looked like junk mail from Citibank. Luckily, I opened it. It was a notice that our interest rate was going from 6.99% to 24.99%! If I hadn't opened this, in April we would have received a staggeringly nasty surprise. I believe the mailing was supposed to be ignored and trashed. They hope customers won't read the notice, because by law, once the new rate has kicked in, you have no recourse. If you read the notice and respond in writing in 30 days, you can choose to decline the rate increase. This means closing your account to new charges, but they let you continue to pay your balance on the old terms for as long as it takes to pay it off. Oh, yeah, and they take your rewards account away. So the miles we have been hoarding will go away in 30 days, meaning we can't use them.

Again, this isn't punitive. We didn't miss a payment, we didn't pay anything late. We are "valued customers" and they "value our business" -- they are just thinking this is a way to raise quick cash or something. It is a terrible terrible idea, at completely the wrong time for most people. Do they really think that tripling interest rates is a great idea in a recession? Who do they think will actually pay that much? Maybe they could stop running so many commercials as a way to cut costs. Or cut bonuses or something.

I would like to think this is isolated -- that it is just Citibank. But apparently other card issuers have been doing similar things. The rate we were given is actually lower than some cards -- some folks are getting letters with a 28% rate. We are toying with the idea of not having a card at all -- we do have a VISA check card, and pretty much everywhere that takes cards accepts it. And it has the added bonus of not being able to overspend, since we are limited to what we actually have in the bank.

In the meantime, I would advise everyone to read every scrap of mail that comes from your credit card company. You don't want to be taken by surprise.

1 comment:

Kitten Herder said...

Yikes! Good advice. I have one card from Capital One. Our experience with them as been good, so far. However, I will definitely be keeping a watchful eye for any correspondence from them.

I went without a credit card for almost five years. It was tough going, but it definitely makes you change your spending habits. Car repairs and appliance breakdowns were the biggest issue. (Hubby still had a card, which we used for such things but paid off as quickly as possible.)

If you have a few grand in savings, you can get by without a card. It just takes some serious behavior modification.