With the economy suffering through a crippling credit crunch, credit card companies have raised their rates substantially for thousands of customers. Credit card customers around the nation are being notified by their credit card companies that their rates may double, increasing as much as 10 percentage points starting next month.
This is feuling much anger among consumers who are feeling the pinch from a credit-tight economy already. Many consumers are trying to fight the changes.
Citigroup has been the target of much of the anger, as it is both a major issuer of credit cards and a recipient of $20 billion in the taxpayer funded bank bailout in October.
Citigroup claims it is only jacking up rates for a subset of their customers, but would not say how many would receive the increases. The company says it is necessary because of the difficult credit and funding environment.
Card holders with Citi Group can opt out of the fee increases and stay with their current fees, but they must close their account when their card expires. Those with cards that expire in at least 2-3 years may want to consider the option because it allows them to whether the current financial crisis and get a new card when the market is potentially better.
There are several remedies in the works to stop rate jacking by credit card companies. A bill introduced in the House of Representatives that set regulations for rate increases passed in September but has been stalled in the Senate and the financial industry is lobbying to block the legislation from passing there. The Federal Reserve is also working on new credit card rules, though any changes would likely not take effect until 2010.