I received a letter from Citibank yesterday informing me that it is changing the terms of my cardholder agreement, specifically the way my interest rate is calculated. I don’t remember the specifics of my current agreement, but the change brings the interest rate to LIBOR + 11.99%, with a minimum APR of 14.99% no matter how low LIBOR might be. This proposed change more than doubles my current interest rate.
I understand that Citi’s in a bit of hot water. I know that in order to return some of the bailout funds Citi will need to change the way it does business. Pissing off loyal customers with an arbitrary interest rate increase isn’t the best change to make. I’ve had my account with Citi for almost 12 years. Any review of my history with Citi will show that I make my payments on time. There is nothing in my credit history or Citibank history to warrant such a drastic increase in interest rate. This new policy most certainly is not in Citibank’s best interest.
Thankfully Citi gave me the option to opt-out of the changes to the cardholder agreement. Why on earth would Citi think that any of its cardholders would NOT opt-out of the proposed changes? I may have been a little less put off by a change of one or two points, but a jump of more than eight points is just too drastic. The customer service rep I spoke with didn’t even try to talk me out of the opt-out or to upsell me any other Citi products. I wonder how many other cardholders are impacted by this change and are going to be upset by it.
Citi is either banking on customer loyalty or the hope that people don’t actually read the notice of a change in terms. I’ve been working to phase the plastic out of my wallet. Citibank just made it easy for me to decide which card is next to go. I’ll be interested to see how much backlash, if any, this policy generates.
