Most of us have always had a love/hate relationship with our credit cards. Whether its convenience, access to cash, fraud protection…we’ve all come to depend on our credit cards. Many of us have stuck it out with the same credit card company for years, believing, falsely, that we were building relationships with these banks that would be helpful down the road. Such has not been the case in 2009. In fact, credit card companies have been putting the screws to customers all year long, with the latest and most egregious example being Citibank’s recent interest rate increases.
Beginning in mid-October, Citi began notifying customers it would be raising interest rates to as much as 29.99%-for no reason. Or at least no legitimate reason. 29.99% is a bit of a magic number in the credit card world as it is usually the rate reserved for people who default, or fail to pay, their credit card. A few years ago, it would take at least two missed payments to get slapped with this interest rate. Today, one missed payment can lead to a 29.99% interest rate with most credit card companies. And with Citi, simply having their credit card in your wallet is apparently all it takes.
Visitor’s of Smart Balance Transfers have written hundreds of posts about this matter. Most of the people slapped with a Citibank interest rate increase reported having excellent credit scores, low debt, and high credit limits. Many had been customers for up to 20 years. Unfortunately, in today’s credit environment, neither loyalty nor good credit histories have been enough to save people from substantial rate increases.
This, in turn, has made many people’s relationships with their credit cards very one sided. The love is gone, replaced by hate and anger. Unfortunately, credit cards are still and will likely always be a necessary evil. They are extremely convenient and, when used properly, provide substantial benefits. Thus, the key thing today is getting a good 0% credit card, not just any credit card. And once you get a good credit card, be sure to keep balances as low as possible. If you owe Citibank nothing and they raise your rate to 29.99%, the rate increase is irrelevant. However, if you owe them $10,000, a rate increase can be disastrous. In the post-Lehman economy, credit cards need to be used like charge cards or as short term loans. This is the only way to avoid paying the price for the mistakes made by our banks.
To learn more about what others are saying about recent rate increases, see the article Citibank Interest Rate Increase Solutions which has over 50 visitor comments
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