Coincidence?
November 24, 2008
Today, CitiGroup received a massive bailout from the federal government, which guaranteed up to $300 billion of its most toxic assets and injected $27 worth of capital into the company. It appears that they could even be hitting the feds up for more later, as most of the learned folks have been writing that this bailout isn’t nearly enough.
For shits and giggles, I decided to go check out my Citi credit card account online, only to discover that my interest rate had jumped from 10.49% to 18.99% – nearly doubling my usual monthly payment.
Make no mistake here – I’m just the kind of customer that Citi wants – this piece of plastic is my only credit card and I’ve had a balance on it for the last several years – which ensures that they’re making interest money off of me every month. Every month I pay my bill as soon as the statement comes out – which is two weeks before the bill is even due. Citi simply doesn’t have to worry about me… and up until now I haven’t really had to worry about them.
So I did the obvious – I called them ready to yell until I got my way. I wasn’t given any reason why the interest rate had gone up, but was informed almost immediately that on next month’s statement, they’d drop the interest rate down to 9.99% for me – but that I had to pay the higher interest rate for this payment. That caught me entirely off guard, but it seemed like they were ready for me – like they get these kind of calls all the time and understand that the best way to deal with them is to just give the customer their way.
My assumption here is that they did this across the board to many of their best customers in the hope that some of them simply won’t notice. I mean, even if they drop my interest rate back down next month, they still managed to make about a hundred extra bucks off of me on this statement. And if 10% of the customers that they do this to simply don’t notice or don’t care about the few hundred extra bucks a month, well then they’ve still made a pretty penny.
The unregulated credit card market is not a well oiled machine… it works counterintuitively in situations such as this. Just like medical insurers are more interested in insuring people who are in good health, Citibank discovered that the best way to impact their bottom line is to go after their best customers… not their worst.
It’s a good thing we’ve got government here to protect us.
Right?
November 24, 2008 at 4:36 pm
My Dad was not an accountant but he taught me long ago that if I could not pay the credit card bill in full when it came, I could not afford the item I was buying. The advice has served me well for 30 yrs.
November 24, 2008 at 5:43 pm
gsh-
I couldn’t agree with you more. Like I said in the post, I’m exactly the kind of customer Citi wants – I bit off more than I could chew in College and I’m paying them to hold on to my debt as a result. I could be a lot worse off – I’ve only got one of these pieces of plastic – there are people out there with a lot more than that.
And while it may be perfectly legal for them to do what they’re doing, I’m going to complain about it until the cows come home – simply because it’s wrong. They punished me for making my payments on time. Is that how this is supposed to work?
November 24, 2008 at 7:05 pm
Steve, vote with your feet.
November 25, 2008 at 12:02 am
this is exactly the thing that destroyed the economy- total lack of accountability and absolutely no integrity in corporate america. why we are using taxpayer funds to save these weed seeds instead of allowing natural forces of business to burn them out once and for all?
we need to stop rewarding bad behavior in this country.
November 25, 2008 at 12:31 pm
We (U.S. Govt.) own enough bank stock to create new, low interest plastic, and make money too. And don’t we already own AIG? Maybe it’s time for AIG to take on health insurance at rates people can afford.