Monday, November 16, 2009

Citi Raises My APR (And I Don't Care)

Oh, the tumult that's been going on in the credit-card world the last ten months or so!

Oh, the angst displayed by dubious cardholders as their precious credit limits have been slashed, their APRs inflated to orbit, and new annual fees instigated!

Yeah. Pardon me while I fire up another batch of buttered popcorn and enjoy the show.

I mean, the entertainment value here — all the verbal flailings and gnashing of teeth of revolving debtors, so loudly pronouncing their financial misfortunes minute-by-minute on TV and the 'net — is sky-high. (Not unlike those new APRs.)

Maybe you've noticed, too: 'Net message boards and chat rooms are absolutely ablaze with debtor diatribes lately.

"Citibank just raised my rate to 29.99 percent FOR NO REASON!" the postings typically go. "I pay all my bills on time! This is so unfair! It should be illegal!"

And so on.

Well, color me fulfilled. Why? Because I can now count myself amongst the great unwashed masses whom Citibank has deemed worthy of a 20+ percent APR on our plastic. (They rate-bumped me a year ago, too.)

Our "20 percenter" letter (PDF page 1 and PDF page 2) arrived just a couple of days ago.

Being a dedicated late-night reader of financial sites and blogs, I'd be fibbing if I said I hadn't been expecting the letter for a while.

It was anticlimactic, really. I knew it wouldn't matter.

Lisa and I haven't carried a balance (other than for card arbitrage purposes) since paying off our cards in 2004. So this APR increase, and all the other rate increases which accompany it (see PDF page 2 above), are of zero consequence to us. This particular Citi card is of the cash-back variety, which means we use it (and a similar card from Chase) for practically every purchase we can, and we pay off all balances in full each month.

This is one of the nice things about being almost-debt-free: Banks like Citi can jack your APR to 40 percent. Heck — make it 50 percent.

When you don't carry a balance, you don't care about the rate.

It's a non-event. A yawner.

You don't carry a balance. That rate means nothing. In fact, you're a predator of sorts.

It's a good place to be.

On the other hand, if you're Liz Jones, then you've got problems. Money school is in session, and the teacher just called you out.

Again I'd like to point out: The private-sector deleveraging that's going on is pretty stout. I'm happy to see it. Heck, I'm almost giddy.

St. Louis Fed: REVOLNS

With unemployment in double digits and credit lines disappearing faster than honey buns in Michael Moore's pantry, your neighborhood Debt-Laden Consumer is likely in a world o' hurt.

For a lot of folks, even those who aren't strictly paycheck to paycheck, life is dishing out a mighty painful lesson:

Debt is not your friend ... and neither is the bank who sold it to you.

For those readers who'd like to venture away from Citibank for a moment and scan the bigger picture, I offer the following, courtesy of the New York Times:

NY Times: Banks Squeeze Customers Ahead of New Rules

Enjoy ... and be on the lookout for your letter!


— Posted by Michael @ 8:10 AM


That's all well and good while you are employed and/or have adequate cash flow each month to cover bills. The problem, however, is that if that unexpected job loss occurs and you have to rely on your credit cards to get through a period of looking for a replacement job, the 20+ percent rates and higher repayment monthlies, create a much more difficult situation for many of the unemployed (you may have read that unemployment > 10% these days). I have been unemployed in the past and had to rely on credit cards and credit lines to make it through getting the next job. It really helped that monthly payments were low enough that you could stretch savings and unemployment out a few extra months. So I DO care...


Ditto. I do not plan on using that sort of credit but I still have a job. That is why I got a new credit card to replace the one they just jacked up to 27.99 with a 9.99. The other one will be in the drawer where I will charge every other month $10 or so just to keep open but screw all credit cards that jack up your interest rate for no reason. I say revolt and keep your old cards to cost them money and when they call tell them I stopped using it because you jacked the rate up to high.


I have been unemployed in the past and had to rely on credit cards and credit lines to make it through getting the next job.

Ummm ... savings much? They work really great when you're "getting to the next job."

Our culture's insistent reliance on credit cards as an "emergency fund" is the prelude to disaster. Stop believing that Chase, Citibank, and the rest are going to be kind to you when you need them most.

Because as we've seen, they won't.

...the 20+ percent rates and higher repayment monthlies, create a much more difficult situation for many of the unemployed ...

Nope. The "high" credit-card rates didn't "create" the difficult situation. A lack of savings did.


I am just like you with not really caring about the interest rates (I just wrote a post about how I don't know my payment due dates either...since I pay my CC every week so I never carry a balance).

I think the CC companies are a bit crazy to penalize folks like you and me but I guess they are waiting for an event like a long unemployment coupled with no savings to get us to care about the rates. This post ROCKS!!!!!


This whole financial crisis is ridiculous. The only ones profiting from are the elite banks.

** Comments Closed on this Post **

Thoughts on my personal finances, goals, experiences, motivations, and accomplishments (or lack thereof).

My financial life began turning around when I took responsibility for it.
— Dave Ramsey


Start (2005-12): ~$21,900
Currently: $0
[About Our Debt Paydown]


Savings Goal: $15,000
Currently: ~$15,115
[About Our Liquid Savings Goal]