Recently I got a revised credit agreement from my credit card company, Citibank. Generally I don’t look real closely at those agreements because I pay off the card every month and don’t pay fees. So when they raise the fees or change the interest rate, it really doesn’t affect me. But it does make me mad that Citibank has gotten itself in a huge financial mess of its own making, has borrowed billions from the taxpayers, and now is going to take advantage of people during an economic slowdown by raising their interest rates. With interest rates on government bonds hitting new lows, an adjustable credit card interest rate based on the federal prime rate also goes down. But Citibank wants the rates to go up. Again, it doesn’t really impact me, but a lot of people are getting pay cuts or being laid off and those interest rate increases will really hurt them when they are down.
By the rules, you can opt out any time a credit card changes the terms on you. This is because you never agreed to the rules when you got the card. However opting out means that once the card expires, it will not be renewed. Today I called Citibank and they said that my rate would be going from 8.99% over the prime rate (currently 3.25%) to 14.99% over the prime rate. I opted out. My card doesn’t expire for almost two more years, so it’s not a big deal right now and I was thinking about switching to a Capital One card anyway.