About a month ago, visitors began posing comments on Smart Balance Transfers about a Citibank rate increase to 29.99%.  The backlash was huge, with over 100 comments posted to date, mainly from customers with very good credit, long histories as Citi credit card customers, and oftentimes, low balances on their accounts.

Yesterday, a new breed of Citibank credit card complaints began pouring in, and these are just as disheartening, though seemingly less severe.  One visitor reported a rate increase to 23.99%.  Another reported getting a notice that their rate was increasing from 16.99% to 20.99% on the same day they got an offer for a .99% balance transfer.  A third reported that her rate was increasing from 12.24 to 16.99%.  This customer had a balance of $10,000 on her card, and the customer service representative encouraged her to keep her account open since the increase would only cost her $28 a month.  The customer service rep, apparently short on math skills, overlooked the fact that this amounted to over $300 annually.

Complaints about the Citibank rate increases that have been occurring have outnumbered the complaints levied against just about every other credit card company this year.  One visitor reported that she had to liquidate her savings and retirement to pay off her balance.  Another reported having to sell his shares of Citi stock (at profit, fortunately) to pay off his bill.  Others are simply confused.

Ultimately, the latest round of rate increases may end up costing consumers more than the dramatic 29.99% increases that flooded mailboxes earlier this month.  The reason these increases may pose a greater issue is that, on the surface, they are much less dramatic than the massive rate hikes.  Turning down and opting out of a 29.99% increase was a no-brainer.  But many people are thinking hard about what to do with 3% to 4% increases, as concerns for their credit scores come into play.

Unfortunately, a 3% or 4% increase in interest rates, especially ones that are already high, can make debt repayment very difficult.  At a 20% interest rate, every $1000 of debt will accrue close to $200 in yearly interest.  Thus, for those with good credit, opting out and applying for a new credit card may be the best option.  And for those with balances, taking advantage of a 0% balance transfer can really help reduce interest expenses and expedite the process of getting out of debt.  In the end, everyone must choose whether they want to do business with this company.  And if another credit card company will treat you better, then by all means take your business elsewhere.

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