Credit card Catch-22

For months, consumers have been trying to shed credit card debt and right their balance sheets.

And for months, credit card issuers have been raising interest rates, reducing credit limits, closing accounts and taking other measures in advance of new legislation that goes into effect early next year.

Now comes Citibank, which is enticing credit card holders to avoid the bank’s rate hikes by — of all things — meeting a monthly spending requirement, the Associated Press reports.

Those who meet the spending minimum — in some cases $750 a month — will be able to get a rebate on their total interest charges for that month, AP reports. The rebate could cover some or all of the interest rate hike.

Does this sound like drinking your way to sobriety?

Citi raises rates, then tries to get you to spend more, so it can make more money and you can avoid the rate hike.

Is this a good way to deal with consumers in this economy?

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20 comments Add your comment

JD

November 20th, 2009
6:14 am

Unfortunately some people will fall for this gimmick and actually think they are saving money by “lowering” their interest rate.

aldga

November 20th, 2009
6:24 am

Wow! Kiss me while you stab me in the back!

Wake up, people! Follow Dave Ramsey and learn how to live DEBT FREE! America needs a TOTAL MONEY MAKEOVER!

J.Andrew

November 20th, 2009
6:38 am

Now why am I not surprised to hear a bank has come up with this solution? Yet another reason to switch to a credit union. Metro Atlanta has a lot of great options. I am with Delta Community, have been for years now, and love them. You never have to worry about a Credit Union doing something like this to their customers. (or members, rather).

Bill

November 20th, 2009
6:56 am

My wife has a CITI card. The rate has gone from 16.9 to 20.9, and now to 23.8 all this year. Fortunately, we don’t carry a balance. Meanwhile the rate on our credit union card is 9.9% and unchanged. I really don’t know why anyone uses a bank if there is a credit union available.

When I was young, (a very long time ago) the first credit card most people got was from Sears. This was considered a good way to establish credit. The downside was that they had a higher interest rate than anyone – 18%. Sounds rather modest today.

I believe that our entire financial crisis stems from deregulation that began in the 1980s. Restrictions prior to that kept banks from getting too big to fail. In my life time we have always had cycles of good times and recession, but since deregulation, they have gotten more extreme. We have enjoyed the crash of 89, the dotcom bubble, the crash of 99, the real estate bubble, and the great recession.

Bill

November 20th, 2009
6:59 am

I forgot to mention the savings and loan crisis in the late 80s

bt

November 20th, 2009
7:00 am

Having spent some 20 years working credit card fraud and bank fraud, it seems as though Citi has truely lost thier everloving minds. This spend more to save gimmick most have come out of a comic book. My suggestion is to look into your local Credit Union/s for fair and honest banking services.

sally

November 20th, 2009
7:09 am

Well, I understand how they reasoned out this option, BUT! Makes as much sense as the federal government trying to spend it’s way out of a recession caused largely by too much consumer spending.

DCB

November 20th, 2009
7:30 am

This new policy may be lousy PR with media sources like the AJC ready to pounce on anything that makes big business sound like the bad guys. But come on, give us a break. Does anyone really think that this policy will encourage spending.

I’m surprised the AJC hasn’t seized the opportunity to promote those programs that promise to help people get rid of debt by getting them a 50% or more reduction in what they owe, or a settlement on their back taxes. After all, there’s nothing wrong with spending, spending, spending or ducking paying your income taxes. It’s those blasted big corporations and banks that expect you to pay back what you couldn’t afford in the first place, and borrowed from them using plastic or signing promissory notes.

PJinGA

November 20th, 2009
7:36 am

Good thing I filed for bankruptcy first!

AB

November 20th, 2009
7:36 am

Folks, the solution is quite simple. If you don’t carry a balance in the credit card and pay it off at the end of the month, it does not matter what interest rate Citi wants to charge you. Last month I received one of those infamous letters from Citi about raising my interest rate. My response was to pay it off and now they get zero dollars from me when I use their card as it will be paid off by the time I get the bill.

Credit Unions rock! Live debt free folks.

Corey

November 20th, 2009
7:59 am

Up until about the early seventies wages paid were based on productivity. As productivity increased so did wages. However, since that time productivity continued to rise while wages stagnated, and productivity has now far outpaced wage increases. Is it coincidental that the introduction of MasterCard as it was called then and BankAmericard is what Visa was called happened just when the wage line and the productivity line on the graph began diverge? The point that I’m making is that the wages we should have been paid we borrow on plastic, or we borrow against our home equity. We’re all being robbed either by big government or big business and bullied by big religion. Have a nice day.

AH

November 20th, 2009
8:15 am

hummm? I’ve got a citi care spend well over $750 a month, but I pay it all off each month I wonder if they will lower my rate? Not that it matters much but it would be nice to know that I have the best rate possible.

Carla

November 20th, 2009
8:24 am

Citi is also planning to limit the credit line of those who pay their balances monthly. Just be aware.

Lloyd Braun

November 20th, 2009
9:43 am

I very skeptical of a bank that misspells their own name. After this maybe they should spell it ShitiBank.
Mazel,
Brauny

FedUp!

November 21st, 2009
8:53 am

CB has just lost a customer. The credit union has just gained a new member.

A.S.Mathew

November 22nd, 2009
8:03 am

God allowed this recession to haappen for a better purpose. I was
surprised to see people using credit card to buy 99 cent burgers,
and everything. The plastic card culture put the poor and middle class
people into serious financial crisis, while banks were harvesting
billions of dollars on human weakness of ” impulsive spending habit”.
If possible, burn all the cards, and live according to the cash we have
to spend. Ten years ago, I paid off my cards, but again I got into
the mess, and trying to pay off everything, and never in life I will
get a credit card. Freedom from the harassing call of the banks
is another experience of “hell on earth”. Let us all fight against these “highway robbery” of credit card culture.

Will

November 23rd, 2009
11:09 am

I have had a MasterCard with Citibank for over ten years. For the past three years or more I have always paid my card on the due date each month that was always the 6th. Last month they changed it to the 3rd and I didnt realize that when I opened the bill. They charged me a late fee of $39 although I only owed $34.86. I smell a rat.

matt

November 23rd, 2009
12:33 pm

Check this deal out! My wife got a credit card application from Barclays bank with an annual fee of 495 dollars. Yes there is 24 hour concierge and you get points for the card usage but $495 is a little outrageous.

howard

November 28th, 2009
9:44 am

why anyone would use citibank or bankofamerica for anything? i have a bofa credit card that i never use and have read bofa is thinking about charging a fee for its customers who do not use their card and/or pay the balance off in full each month. i’ve been waiting to get my notice from bofa. thank goodness i’m with usaa and a credit union for my banking. although i’m a little disappointed in how my credit union has acted lately (it’s almost as if citibank or bank of america were running the credit union). of course banks would love nothing more than to put all credit unions out of biz. support your credit unions. there’s a credit union available for nearly everyone. start asking. look into it. dump the banks.

Tax Dude

December 2nd, 2009
7:50 pm

Is this what the credit card industry has come to? A spending quota in order to avoid being ripped off. I am still surprised that there are people who pay double digit interest rates for carrying balances.

There are so many low introductory rates that I cannot understand why anyone would willingly pay double digit interest rates. simply roll the balance each time to a new card before the introductory rate expires.

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