Card companies rapidly increase rates

February 23, 2009 7:15:39 PM PST
If you have a Citi credit card, check your interest rate -- you may be paying more in interest than you think.

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Some even received a separate letter in a separate envelope so Citi wasn't trying to hide their increase, still many consumers are left with the questions, why me? And why now?

Ronnie Schuh was surprised that after holding a Citi card for 23 years, the company has pulled the plug, or more to the point, she felt pushed to end their relationship.

Why? she is refusing as monumental jump in interest rates.

"Well, they raised our interest rate from 6.74 percent to 14.99 percent," said Schuh.

"That is a big jump," said 7 On Your Side's Michael Finney.

"Yes it is, and our credit score is between 735 and 750 so it can't be because we are a high risk," Schuh.

A credit score like that is called 'golden' and yet even 'golden credit' didn't protect her from an increase of more than 100 percent.

Her statement shows 6.74 percent and then the new interest charge, again on the top line 14.99 percent. The new statement so ticked her off so much, that she wrote Citi a letter.

"And the excuse that we got was that their cost of borrowing in this day and age had gone up," said Schuh.

That is not what they told 7 On Your Side. After we inquired we were told, in part: "The industry has recently experienced an unprecedented market cycle with severe funding dislocation and significant consumer credit deterioration driven by the mortgage crisis and rising unemployment."

And Citi wanted to up my credit card interest rate, too and mileage point cards were being upped to nearly 20 percent.

So I called and asked that my rate remain the same. But Citi stood firm, if I didn't want to pay basically 20 percent I should opt out.

Customers opting out are free to keep their current cards and old rates until their card expires. For some that's a year and a half or more.

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