How Is Citibank Responding To Their Problem?

[JLB Please excuse me, I'm a Dick. Not a moron just a Dick Find all posts View Profile Close JLB]

For us, and our Citicard MasterCard account, they are responding to their crisis by running off their customers.

Today I got a notice that they will be raising our purchase APR to a variable rate not lower than 18.99%, our cash advance APR to not less than 21.99%, our default APR to not less than 29.99%, and they are increasing all the other fees, plus adding new ones.

As a point of reference, the RCI Elite Rewards BOA VISA card we use for purchases has an APR of 6.9%.

If we opt out, they will close our account June, 2009, and we would pay any remaining balance under our present terms. The balance we have is a business loan from a balance transfer offer at 2.99% until Jan, 2010. They said they would honor that. If we opt out, they close our account in June, and if we do not pay off the balance transfer balance by Jan, 2010, it would continue at 12.4%.

I spoke to a customer service (?) person who could not explain exactly what would happen after June if we opted out, and then her Supervisor, who could. I have never spoken to anyone in business who sounded as depressed as the Supervisor, as she explained that Citibank has no option but to do what they are doing. When I suggested that it seems they are running off the customers they need to survive, well, I could tell in her voice that yes they are.

It would take a degree in business and economics to figure this one out . . . Oh, wait, I've got those.

[bunnyhop Member Find all posts View Profile Close bunnyhop]

Yikes!!!

I just got a citi bank card replacing my mayc's charge card! I didn't want it, so I called the number to cancle the card. They did.

My dad got a card in the mail a while ago and looked at the APR %'s. My dad said, "That's funny, these credit card services say they want to help everyone through this crises, but sure like to keep those interest rates high in the sky."

How is anyone suppose to get out of debt?
I don't think that's the credit company's idea.

All these businesses want everyone's business, but don't give any reason to do business with them, or their competitors. It's a real shame. I don't think these companies have any idea what they're really doing.

[3kids4me Super Moderator and Super Mom Find all posts View Profile Close 3kids4me]

I actually think this may be a good sign. It means that banks are starting to make sure that no one who really shouldn't be racking up debt on credit cards charges a kazoodle of money on them. At such an exorbitant interest rates, they will know right away if someone is going to default!

[joycapecod Silver Contributor Find all posts View Profile Close joycapecod]

And then there are those who pay their bill in full month after month and then all of a suddend the fridge, dryer and dishwasher die in the same week. They have a card at 6.9% and figure "well, I'll pay $500 a month for the next 6m or 7 months and this will be paid" and they too get that letter.....

Where's the equity??? Because Banks made poor choices they are punishing those who didn't. Those who made poor choices got huge bonuses and now they are riding on the backs of those that "did/do the right thing" by living within their means and using credit wisely.

Joy

[vintner Super Moderator Find all posts View Profile Close vintner]

I actually think this may be a good sign. It means that banks are starting to make sure that no one who really shouldn't be racking up debt on credit cards charges a kazoodle of money on them. At such an exorbitant interest rates, they will know right away if someone is going to default!

Wow, interesting opinion.

I think that could cause more problems with fewer people able to get credit, or having their current credit card rate and current charges are being changed. It is making it tougher for the everyday average person (not just the deadbeat) to do their day to day tasks.

I received a letter yesterday. One of my credit card companies has lowered my rate a tiny bit and raised my limit. I guess they think it is up to me to do all the consumer spending to bring the country back to recovery. Sorry...that aint gonna happen.

This is the same card that offered a low rate on a transfer. Me being not aware of how life works, I would make a payment thinking part was going to the new (higher rate) purchases and part was going to the transfer, I found out it was only going to the lower transfer rate. They were charging me the higher rate and not making payments to it and that me pretty bad. That card is out of my pocket and the balance on the card has been paid.

[vintner Super Moderator Find all posts View Profile Close vintner]

When we were looking for a house about 5 years ago, we went in to get qualified. She checked our credit score, crunched some numbers, back and forth between computer and calculator and told us a number.

We were shocked...and pleased, but shocked. That was a very high number. That number is about 70% higher than the house we did buy.

If we had looked for a house at the level we were approved, 4-1/2 years later we would have been left with a house costing us more (insurance goes up, taxes goes up, maintenance, utilities all increase) than what we could afford.

We were told that we were among the few that looked at what they could actually afford and not what they were approved to buy.

It was us that kept us out of trouble and the banks that were over approving. It is that banks that have cause much of this problem.

[joycapecod Silver Contributor Find all posts View Profile Close joycapecod]

Yes, it is the banks that caused much of the problem and it is the banks that are getting the handouts. My DH was forced to take early retirement; November 30 was his last day; he is 59. Had he been 60 (DOB 1/25) he would have gotten a parachute, but 55 days short he get nothing but reduced retirement. A majority of this was casued by the banks not lending after they received bailout monies. Do I have any sympathy for those at Citi, HEL* NO! Many more of them deserve to lose their jobs; they were cavailer when they made some of these loans and they should find out what it is like on the "other side".

Of course we are in much better shape than some. We did lots of things right. We bought a house 13 years ago that we only needed one income for and paid it off early. We sold a house a few years ago that was an investment property in another state and did the 1031C with a property 7 miles away. We replaced the roof on our house when we had the $ and paid off my car early and didn't buy a new one. We have credit scores in the upper 780s and are still getting the letter from CITI. Citi can screw as far as I am concerned.

JMO

Joy

[JLB Please excuse me, I'm a Dick. Not a moron just a Dick Find all posts View Profile Close JLB]

Part of my idea on how to handle the mortgage foreclosure problem is/was to have all of those who received bonuses for writing loans that should never have been made, to return those bonuses . . . into a fund . . . to be used to help rewrite the bad mortages. The price for bad business would be determined by how much bad business a company encouraged.

Loans would be rewritten and people would stay in their houses, rather than having beaucoup Lehigh Acres around the country.

The foreclosures have had a more disastrous affect on our economy than the bad loans themselves, IMO, because having them on the market has spread the problem on to people who do/did not have mortgage problems, who kept them paid, when they tried sell their house. Actually, put us in the last group. Our house is paid for, and we would like to sell it and build a new house down the road, but can't because of the market situation.

Those who made poor choices got huge bonuses and now they are riding on the backs of those that "did/do the right thing" by living within their means and using credit wisely.

Joy

[3kids4me Super Moderator and Super Mom Find all posts View Profile Close 3kids4me]

And then there are those who pay their bill in full month after month and then all of a suddend the fridge, dryer and dishwasher die in the same week. They have a card at 6.9% and figure "well, I'll pay $500 a month for the next 6m or 7 months and this will be paid" and they too get that letter.....

Where's the equity??? Because Banks made poor choices they are punishing those who didn't. Those who made poor choices got huge bonuses and now they are riding on the backs of those that "did/do the right thing" by living within their means and using credit wisely.

Joy

This is what happened to us (Chase) on our home equity loan. It was frozen back in July based on defaults by other folks and declining real estate values, but not based on our own credit rating. Not very fair...but the response I got, as I recall, was that everyone should live debt free and not spend money they don't have. I didn't like that response at the time either...and I'm surprised we haven't seen the same responses on this thread.

As for Citibank, my husband works for them and his salary has been cut dramatically. I don't know who is getting the big bonuses, but I don't think it's the bank employees. I'm just glad he still has a job, although he seems to work about 20 hours a day now that there are so many fewer employees.

[joycapecod Silver Contributor Find all posts View Profile Close joycapecod]

Sharon, I agree that it's not the little guy getting the bonuses, but the fund managers, the mortgage brokers and the upper levels of Bank management. At least your husband still has a job..... Mine was forced after 30 years to take retirement at age 59 effectively reducing our income by 60% not including the benefits (company car, gas, expense report). So, not only did we lose the job, but had to buy a car in an unfriendly lending market.

If truth be told, I feel all those responsible for this problem should be prosecuted and forced to pay back the bonuses that were paid on inflated earnings and then get some jail time to boot....


JMO,

Joy

[JLB Please excuse me, I'm a Dick. Not a moron just a Dick Find all posts View Profile Close JLB]

It gets better.

There is a Rewards program with our Citicard. Until today I never paid any attention to it. But, we got an email from them saying we can earn double points for purchases the next 12 months. That, with the letter announcing the new terms arriving yesterday, made me curious.

So, I signed us up on the awards site. They owe us $234. Huh!?

So, let me try to figure out why they are not making money.

First, our present interest rate is 2.99%, and it is that only because we selected that over the 0% offer, because the term was for much longer.

And, they are going to give us $234.

OK, I think I see their problem.

[tonyg Goomba & Super Moderator Find all posts View Profile Close tonyg]

It's not a problem. They collect a percentage from the merchant every time you use the card. The reward (for those aware of it) comes out of that percentage. Most people buy like crazy using the card and end up paying interest on that portion of the balance they can't pay. At one time I was getting 5% back on every qualified purchase and paying the statement in full every month, so they weren't making money on me. They got smart and dropped the cash back to 2%- keeping me using the card and perhaps only losing a small amount. Those who don't pay the balance every month pay for what they lose on me and give them a nice profit.

[jlwquilter Senior Member Find all posts View Profile Close jlwquilter]

I got my Citicards letters as well. I am going to be one of the gazillion calling to verify that my current "special offer rates" won't be changed. I have one card that is a balance tranfer and has 0% until paid off and a second card, also a balance transfer rate, that is 1.99% until paid off. I will take a LONG time to pay them off. Basically, the $$$ was construction costs on my house as the contruction loan interest rate was much higher. My third card is for monthly expenses and gets paid in full every month.

I will say that I've been a day or two late paying on a few occassions, due to simply forgetting what day it was (hazard of a stay-at-homer). Citi always reversed all late and interest fees for me due to my long good standing with them. I am no longer going to take a chance though! I bet they won't be quite as forgiving in the future! I have switched over, finally, to paying on-line and that really takes care of that potential issue anyway.

I used to work for Citibank (retail bank division in NYC) in the early 90s. They had layoffs then too. Not happy times. Then or now. What a mess.

[JLB Please excuse me, I'm a Dick. Not a moron just a Dick Find all posts View Profile Close JLB]

Having been a bankcard merchant for many years, Tony, I understand that source of income. I meant to mention that, then forgot to. A portion of that goes to the bank.

I don't see how that explains 19%-plus interest rates. Or the rewards we received on the balance transfer, which had no merchant fee.

Today we got an email from Citicard with another 0% BT offer.

Wish they'd make up their mind . . . either give us free money . . . or gouge us.

[tennisWalt Super Moderator Find all posts View Profile Close tennisWalt]

Here Is a Good Savings Offer From Citibank?

Not a bad deal....... They give you 2.75% savings return and make more than 30% with it. 29.99% default rate plus the per cent they charge the merchant.

Walt



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