November 23, 2009
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News: Citi Rewards High Spenders
Citibank will begin rewarding credit card customers who spend, spend, and spend. Some cardholders will be given a rebate on their interest charges if they spend over $750 a month on their card. The exact amount of the rebate varies depending on the credit cardholder's credit history. With the new policy, approximately 50 percent of Citibank's cardholders will have the potential to eliminate anywhere from 50 percent to 100 percent of the interest rate increases. The interest rate savings will apply to the entire credit card balance and not just that one month's transactions. Speculation is that Citibank's latest move will help to generate more interchange fees as well since the company earns a small percentage of each payment transactions it undergoes on one of its cards.
Citibank is one of the nation's top four credit card issuers with approximately 92 million cards in circulation. The giant lender released a statement saying that recent actions taken to slash credit limits, close accounts, and raise interest rates were in response to the soaring credit card defaults and new legislation that will stifle the bank's ability to participate in risk pricing. Citibank also indicated that higher volume customers will have the greatest opportunity to benefit from the reduced rates program. Customers who choose not to participate in the new program will be given an opt-out option whereby they will be allowed to continue using the card under the old interest rate until the card expires. A small select group will be cancelled.
Nearly every bank has participated in the same type of cruel activities over the past several months. Credit card customers have been blindsided by these merciful less practices of lenders that have doubled and tripled interest rates and imposed numerous unfair penalties. This is just the latest in this series of brutal acts that customers have experienced over the past year. Several of the lenders have instituted an annual fee ranging anywhere from $29 to $300 a year.