Citi to Keep Bilking Customers Despite New Regulations
When Congress passed rules to reign in the most usurious of credit card practices, many Americans cheered. When Congress moved up the deadline for companies to comply with the rules because credit card issuers began raising rates in an effort to squeeze as much cash out of strapped Americans before the government started regulating their greed, Americans breathed a collective sigh of relief.
But just as if given enough monkeys, typewriters and time, one will get Shakespeare, give the credit card companies enough lawyers, money and contempt for their customers, and they’ll find a way to avoid regulation.
At the forefront, as James Kwak reports, is Citi. Since they will soon no longer be allowed to raise interest rates immediately, permanently or for no reason, Citi is raising its rates for all customers to its bad-creditor rate of nearly 30 percent. Customers who had been paying lower rates will be made eligible for a “program” that lowers the standard interest rate back down to the rate they were paying, but if they miss a payment, the rate shoots up immediately and retroactively — one of the very things the new credit card regulations were designed to prevent. In Citi’s case, since it’s a “program” rather than a rate, they think it’s legal, and that it will allow them to continue their current interest rate games despite regulations designed to stop them.
Oh, and Citi’s clear about one other thing: As a customer, your only two options are to play along or to pay off your balance, cancel the card and try your luck elsewhere (not that you’re likely to have any). It’s kind of a twofer: Citi can show its contempt for the law and its customers, all in one fell swoop.