CITIGROUP ENDS “UNIVERSAL DEFAULT” CREDIT CARD PRACTICE

March 2, 2007

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The Washington Post reported today that Citigroup is ending two credit card practices that have been criticized as abusive by consumer groups and some Members of Congress. Citigroup is reportedly going to stop “universal default” clauses, whereby defaulting on another bank’s credit card will cause your interest rate on Citigroup credit cards to increase.

Citigroup said it also would no longer reserve the right to raise a customer’s credit card interest rate at “any time for any reason,” a policy also common in the industry.The company said the only reason rates and fees would increase now would be because “a customer pays Citi late, exceeds the credit limit or pays with a check that bounces.” For the full story, go to http://www.washingtonpost.com/wp-dyn/content/article/2007/03/01/AR2007030101525.html

I’ve got to hand it to Citigroup, even thought Congress has put pressure on them recently about these issues, at least they did something positive instead of waiting for legislation. If the other major credit card issuers would just do the same, they would likely have better relations with some of their customers and maybe even collect more of their money in the long run, rather than increase the number of bankruptcies by unfairly increasing interest rates to 30%+, just when someone is having financial problems and defaulted on another obligation.

Citigroup Ends “Universal Default” Credit Card Practice