“It’s the increased cost of doing business,” was Citicard’s constant refrain when Kent’s husband called to complain about their latest pre-CARD act adverse action insanity: transfer $5000 in balances from other credit cards to this credit card or we’ll double your interest rate. Listen to Kent’s message left on the new Consumerist hotline and/or read the transcript:
TRANSCRIPT: “My name is Kent, and my husband yesterday we got a mailing from Citibank.
They’re basically threatening to double the interest rate, or, not threatening, they were doing it. They’re saying the only way he could lower it is if we transfered $5,000 in balances from any other card we may have. We have a balance on the card, but we haven’t used the card in over a year.
So, basicaly, here, run up more credit. My husband say, this isn’t acceptable, and he negotiated with them, and was just kind of hard with them.
They kept saying over and over again, “It’s the increasing cost of doing business, it’s the increasing cost of doing business.” It was their constant refrain. The people were very well trained to stay on their message points.
It was interesting, they were basically saying “here, run up more debt.” Obviously that’s their business but it’s irresponsible for anybody.
And it’s just insane. The woman even said, “Well, we can do this.” Well, we’ll see.” : END TRANSCRIPT
So let’s get this straight. Bankers have to increase credit card interest rates to “price for risk,” which, supposedly, is the increased risk that debtors will default in this economic client. But here, Citi is saying, become a riskier customer by putting more debt on this card, or we’ll punish you by doubling your interest rates.
Let’s cut the banker bullshit. It’s not about credit risk, it’s about profit risk. Citi is trying to drive away the least profitable customers, like Kent and her husband who haven’t used their card in over a year, and saying that hey, if you’re going to stay with us, you’re going to have to be more profitable by having more debt for us to make money off of servicing.
Remember the bottom of the contract where it says they can unilaterally change the terms at any time? Well, that time is now.
The good thing is that Kent and her husband can probably reject the change in terms of service and interest rate, freeze the account (it’s not like they’re using it) and then pay it off or transfer the balance to another card.
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