Credit card customers may need the Credit Card Accountability, Responsibility and Disclosure Act sooner than they thought.  The Act, which was signed into law by President Obama last May but won’t become effective until February of 2010, was put in place to protect consumers against actions like those taken by Citibank this week, where the bank raised the interest rates as high as 30% for some customers, including those with a good credit history.

Citibank-profitsRising Rates

These recent interest rate hikes reflect an almost 200% increase in APR, which many believe is a result of banks attempting to get as much money out of its current users before the legislation goes into effect that would, in part, prevent banks from making unannounced interest rate hikes. The law requires banks to give 45 days notice before making rate changes, and forbids banks from raising rates within the first year of a card’s contract.

In addition to these new interest rates, Citibank and others have sent notices to their credit card users that some cards, which before had no annual fees, could now carry as high as $90 yearly fees.  These kinds of actions have made lawmakers in support of the new credit card regulations, like Senate Banking Committee Chairman Chris Dodd (D-CT) suggest that maybe the deadline for the laws to become effective as soon as December 1st, to provide protection to consumers as soon as possible.  However, Fed Chairman Ben Bernanke has defended banks, saying that for institutions to change their credit card policies on such short notice would be too difficult.

Banks Start to Play Rough

Citi is not the only bank to impose tough new rules on their credit cards. Other banks have also increased rates and fees, or cancelled cards that they believe offer too many amenities, even for customers who pay their bills on time. As the federal government cracks down on lenders with new regulations, they must reign in some of the more costly, consumer- friendly features of their credit ard business in order to be able to continue profitably providing credit to their customers.

While the new Credit Card Act will provide protection for consumers against some of the more egregious credit card lending practices, it will also make owning a credit card more difficult in the interim period before these regulations go into effect, and may even cause some of the nicer aspects of credit cards, like rewards and benefits, to disappear, as lending becomes more costly to the lending institutions.

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  • katam

    Last nigh, I received a letter stating, that my interest will be raised from 8.24% to 29.9% starting november 30, 2009; I have never missed a payment or gone over my limit.

    I called the bank to opt out from this notice, I had no other chance but to cancel my credit card, I know closing a perfect standing account will hurt my credit score.
    I am outraged, I found this disgusting!!! How is it possible for the banks, to take so much advantage of people?

  • jeepers0123

    They did the same to me in September. I cancelled the card immediately talking to their highly paid rep from India who told me my 25,000 rewards points would not be affected. The rewards points are revoked 30 days after closing an account! I decided not to pay my bill for the first time in 15 years. Funny thing happened, an account specialist called wanting to know what was wrong. LOLOLOLOL

    I told him the loan was unsecured….he offered me a 5 year payout at 0% interest. They've already screwed up my credit so let um eat the principle on their million $$$$ golf outing.

    If we all refuse to pay they won't get bailed out again. JUST SAY “NO” I'm not paying….goodbye!

  • spielman

    You should move your card balances to a credit union credit card. No funny games, just a great rate and no fees.

  • Tired of CITI


    I just got that nasty thieving letter from Citibank too. No explanations on why or who was selected. Sounds like theivery to me. I suggest we all complain to the politicians who helped bail them out. A theif is a thief!

  • KenStorkSux

    Citi cardholder in good standing since '95, received my letter today to raise to 20.99% with same scam offer to lock at 9.99% until 2011 if I transfer an additional $3,000…then to 20.99% after that. I will be opting out, closing the account and taking my savings, checking, money market and mortgage with me. Yet again, the honest working guy gets screwed to bailout the welfare state and wall street! The working man is the true sucker!

  • I hate Citibank!

    I am glad to see that other people are standing up to Citi and closing their accounts. I also have been with them for 4 years, never missed not even ONE payment, and always pay in full. I received a letter stating my APR is 20.99%! Ridiculous! I am going to use all my points to buy frivalous things and then close all my accounts. I'd rather take a temporary ding on my credit score then allow them to take advantage of me! But it still pisses me off that I am forced to accept this or ruin my credit. Absurd!

  • mark jacobs

    I had a Citibank diamond card with a $40,000 limit. Never missed payment. Never late. I float around $5k-$7k on it. It's for business and I don't mind since the interest is tax deductible. Got a letter last month that my credit line was reduced to $5k. Today got a letter that my APR went from 10% to 29.99% starging Jan 1 '10. No help on the phone.

  • Citi has no heart

    Received my letter today to raise to 18.99% Ken Stork and William Rhodes Do Not have a heart. In these tough enconomic times how can any company stoop so low…

  • kenajohn

    In November, Citicard notified me that my APR would be raised to 29.99% on any remaining balance after 11-30-2009. I was given the opportunity to “Opt Out”, meaning that my APR would remain the same, but I would be unable to use the card and my account would be closed. I closed both my accounts
    (Citicard and AT&T Universal Card) to avoid the higher interest rate. I reviewed my December bill and found that my APR was raised to 29.99%. I contacted customer service, and they said that they had no record of my choosing to “Opt Out”.

    I believe this is just another attempt at a big business bailed out by the government to gouge customers that have no voice or avenues to pursue to make them keep to the contract they offered. I hope someone will hold them accountable and make them refund all the customers they have defrauded.

  • Ken

    You all may be in luck. A class action suit has been filed against Citibank for this very thing. Maybe justice will be done.

  • mark

    Don't close the account and hurt your credit, just transfer it out to another low interest promo. Sure, I think the credit score fairy frowns on this, but I doubt it's as bad as closing the whole account, especially if it's an old account. If it's new, then not as big of a deal. But the main point is that you don't want to lose a big chunk of 'available credit'.
    I've been a perfect customer since 04, and they just raised me from 14% to 19%. Now, I have $3k regular purchases on top of a recent $5k 0% promo. As of now, my payments go to the 0% first, and the old $3k keeps earning interest. But new laws may reverse this. If they do, I'm going to transfer out the old $3k, and leave the 0% balance there until it expires. Of course, all the while, I'm not using this card again, until they get their act together, and give me a rate below 10%, like I used to have.

  • mark

    ..Or better yet, I just won't use them again!
    I'm working on getting myself 'back to even', and then 'debt free'. (with the help of my friends J.Cramer and D.Ramsey)

  • Smith_and_Wesson

    Well I have been unemployed. I contacted them last year for help, the placed me on a 0% APR for twelve months which could be extended if my situation failed to improve. It did not. After previous APR of 14.96% and then twelve statements of 0%, it went to 29.99% with NO WRITTEN NOTIFICATION and as a result of all credit in use, the interest generated an overlimit fee of $39. I have submitted a complaint to the Better Business Bureau of New York regarding the interest rate hike with no notification as well as their refusal to honor the agreement to extend the 0% APR if I was still unemployed (as I am).

    I have verbally informed them that NO PAYMENT will be made on this account until such times the $318 they claim I owe is lowered to something an UNEMPLOYED person can afford to pay.

    I will later this month place it in writing “Account written-off by debtor, account has been given status of non-payable and no further payments will be made on this account. This account and business relationship is considered terminated. Do not contact me again regarding this matter, this includes by electronic means such as e-mail or phone AND written forms such as by letter. Anything received by mail will be refused and returned, postage-due if after checking the account online, no reduction has been found in the current interest rate charged and amount due. After seven and a half years, this account will roll off my credit record, or sooner if you take any legal actions as I will file BANKRUPTCY. I have previously warned you. Do not contact me again.”

    I recommend everyone do as I describe above, write them off as non-payable, return future letters or items received in the mail by sticking a label across the address area which reads “REFUSED – RETURN TO SENDER”, which the USPS will charge them for the return postage upon delivery back to them. If they or anyone working for them chooses to call by phone, my whistle is ready to kill the hearing of anyone calling, as I have told them “do not contact me again”, which means I can do what I like if they try to contact me by phone. Of course if they try to serve a summons, I have a choice of ignoring delivery or filing Bankruptcy, either way it will cost them.

    These assholes will pay.

  • Former Citibank customer

    They have now instituted a $60 annual fee to go with their a lot of their cards.

    See Slickdeals and Fatwallet for added details.

  • Geno

    When citibank, raise my rates from 7.9 to 13.99 on 12/28/10, i moved my balance to my credit union account for a fixed 10.49 for purchases & cash advances, with no fees of any kind.

  • nancymayes

    i have always paid my bill to sears on time. “THEY” raised my interest rate to 29.99 and also charged me a 39.00 dollar fee. when i contacted them as to why, the answer i got was “I PAID MY BILL TO EARLY”, they did not put it toward the month i was paying. they said i paid before the cycle.

  • nancymayes

    i have always paid my bill to sears on time. “THEY” raised my interest rate to 29.99 and also charged me a 39.00 dollar fee. when i contacted them as to why, the answer i got was “I PAID MY BILL TO EARLY”, they did not put it toward the month i was paying. they said i paid before the cycle.

  •  This is the same bank that was instrumental in causing the great depression. Then they were called National City Bank. Just fyi  here read up:
    And 80 or so years later they screw us again.