October 20, 2009
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News: CitiBank Cancels Gas Cards Without Warning
As the U.S begins recovering from the recession the nation continues the uphill battle against rising unemployment. In order to carry them through escalating loan and credit card defaults, lenders and credit card companies have dumped assets and skimmed expenses. Citibank is no exception. One of the nation's largest credit card companies, in a surprising announcement, many of Citibank's oil companies' co-branded cards have been cancelled with customers receiving no warning. Citibank did not make any formal announcement of the closings. Many customers discovered their account had been closed when they went to pay at the pumps. Outraged, customers are spreading the word throughout the internet.
The MasterCard accounts that included Shell, CITGO, Exxon Mobile, and Phillips 66-Conoco oil cards were closed on October 14th. However, a Citibank spokesperson indicated that notices regarding the credit card account closings were mailed out to customers on October 12th. However, October 12th was a holiday and therefore, it is safe to say that the notices didn't really get into the hands of the United States Postal Service (USPS) until the 13th, just one day prior to the credit card account closings. Citibank has not released an exact number of accounts that were affected by the decision nor the estimated amount of credit.
The Citibank co-branded gas credit cards have not been the only targets of the bank's strategies to trim expenses, they recently also closed out their Home Depot portfolio. According to the Citibank spokesperson, the company has not completely dissolved its gas card business; they are continuing to accept card applications. Citibank's decision to close down these accounts without warning or formal notices is not against the law nor are there provisions for such activity in the new legislation that will become effective in February 2010. With further limitations placed on lenders by this legislation, it will be more difficult for them to adjust for risk by raising interest rates and fees. Banks will have no alternative but to simply shut down accounts they feel place the company at risk.