Well it appears that Citigroup is having a tough time keeping their word to Congress. Over the past few years, Congress has done a lot of talking about credit card reform with one of the focuses of eliminating the universal default clause. This is the clause that every consumer signs off on, allowing the credit card company to change the terms and conditions, interest rates, etc just because they want to do so.

In 2007 as Congress was talking about credit card reform, Citigroup promised that they would not raise rates on any cardholder as long as they were in good standing.
Last November, Citigroup went back on its word and started raising fees on customers in good standing. The notice that they sent out said the following:

If the customer had not enjoyed a rate increase in two years, he or she could expect to enjoy one in January. No, I cannot make this stuff up!
So why would they go back on their word? Company spokesman told the New York Times that the business environment was tough and hurting bank profits. As a result, they were forced to raise rates.

This is an unfortunate trend that we are seeing all across the credit card industry. However, not all companies are utilizing the universal default clause. If this happens to you, take these action steps:

1) As a general rule of thumb, be paying very close attention to your statements. The credit card industry has at least until July 2010 to change anything it wants on your credit card account. Make sure that you stay aware. They don’t send out a lot of fan fair announcing these changes.

2) If your rates go up, check your credit score. If your credit score is in the 700’s, find some other company and transfer the balance to a lower rate.

3) If your credit score is not very good, call the credit card company and aggressively find out what has to be done to get interest rates lowered. When I say be aggressive, that means to be polite, persistent, and determined. If you don’t get a good answer, call back and or ask to talk to a supervisor. It is hit or miss and sometimes depends on the supervisor and/or the credit card company.

4) Don’t close the account. Sometimes you get the option to do so. Closing accounts has no benefit and can lower your credit score.

5) Don’t claim that you are being treated unfairly and just stop paying based on principle. This is the worst thing that you can do. By not paying, you will create a whole set of problems. Remember when you sign a credit card application, you just signed away the option to be treated fairly.

Tags: Bob Brooks, citigroup, Congress, credit card company, credit card reform, Credit Score, Deceptive Money, Prudent Money