We The Peeps

Author: TJ (90 Articles)

Computer Geek / Network & Systems Administrator. I have been in computers my whole life and have dabbled in different programs and some web design. I like movies, music, dinners, cooking, hanging with friends, although I am more of a homebody. I like to debate my views with other people in politics, religion, equality, health care reform, and several other topics. I believe in equality for all, and not just some. We have the freedom of religion and the freedom from religion. No religion should dictate our laws, nor should we ever write any discrimination into the constitution. I also believe that just because the majority voted for something, doesn't mean it is the best thing for this country. Americans need to quit selling out their fellow man and demand that NAFTA be fixed now, or just needs to go away, period. America needs to take care of itself before its to late. We need health care reform now. We should never leave health & human services in the hands of the free market. We should never allow anyone to profit off the suffering of others.

Citibank decided to raise interest rates on up to 15 million credit card holders again.  What I don’t understand is if we are an economy based on consumer buying, why they would raise interest rates again?  Why would you want to pay 30% interest on an item that you more than likely can pay cash for within a short period of time.   I understand the bank are in it for the money, but just because you can, doesn’t mean you have to.

Look at the housing crisis; the banks sold variable interest rate mortgages to millions of people.  Understandable, some people bought more than they could afford, but many were first time home owners that were told that they could only get a variable rate for their first mortgage.  People who were never late on their mortgage may have fell behind on a credit card, accumulated some medical debt, etc and their credit score dropped some.  The banks took advantage of the situation and started to economically rape the American people.  Millions of homes started to foreclose, people couldn’t afford the upkeep of their home and pay the mortgage, in turn, and house prices fell for everyone.

With Citibank doing this rate hike, do you think they are just taking advantage of people in a bad situation so they can further destroy the middle class or do you think that this is a good business practice?  Do you think that this will further the decline of the consumer purchasing power?

I myself do not have any credit cards, and I pay cash for everything, so this will not affect me at all.

Here is the article from the financial times:

Citi raises card rates on millions

By Francesco Guerrera and Saskia Scholtes in New York and Tom Braithwaite in Washington
Published: June 30 2009 23:59 | Last updated: June 30 2009 23:59

Citigroup has sharply increased interest rates on up to 15m US credit card accounts just months before curbs on such rises come into effect, in a move that could fuel political anger at the treatment of consumers by bailed-out banks.

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.

Citi’s rate increases emerged on the day the government proposed legislation to create a new regulator with sweeping powers on consumer protection and a week after the bank was attacked by some politicians for raising employees’ salaries.

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.”

Citi’s move came as the economic downturn caused record defaults among US card users and prompted many issuers to raise rates, both to cushion their losses and pre-empt the new restrictions set to come into effect in February.

However, Citi’s increases have been larger than those of its main rivals, according to Lightspeed, which tracks about 12,000 US credit card accounts.

Carolyn Maloney, Democratic representative for New York, the author of the new rules that will sharply constrain lenders’ ability to raise rates for risky borrowers, criticised Citi’s move. “It’s hard to tell if rate hikes on existing balances being put in place now are the result of prior bad business decisions or getting in under the wire of the new law,” Ms Maloney told the Financial Times.