Citigroup Increases Credit Card Interest Rates – FOXBusiness.com
Hope Holland – FOXBusiness
Citigroup has increased interest rates on up to 15 million U.S. credit card accounts only months before curbs on such rises come into effect, the Financial Times reported.
“This is part of an ongoing process they do,” said Dennis Moroney, Research Director of Bank Cards at Tower Group. “Our research indicates the banks have been very active in reducing lines and raising rates, anticipating they can’t when the legislation takes effect in 2010. At the same time, they don’t want to kill the golden goose — the customers.”
The paper cited people close to the situation who stated the increase will affect between 13 million and 15 million credit cards the group co-brands with retailers like Sears (SHLD: 65.15, -1.37, -2.06%).
In addition, the company is on the verge of relinquishing a 34% stake to the U.S. government as part of its rescue during the economic downturn.
“We have adjusted pricing and card terms for some customers as part of our regular account reviews,” Citigroup said in a statement. “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.”
President Obama passed the Credit Card Accountability Responsibility and Disclosure Act of 2009 in May to help control financial industry practices.
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