Almost everyone over 18 has at least one credit card, and some have four or more. Credit cards are very useful, but they can quickly become your worst enemy. Imagine opening your credit card statement and seeing that your interest rate has gone up, but you didn't pay your bill late and can't figure out why. Citigroup Inc. has decided to stop many of the interest rate hikes that have been confusing customers.
Since the average American with a credit card owes more than $8,000, the interest rates on these accounts make a huge difference in how much money is paid back for purchases made with credit cards. Credit cards are the best way to shop online, book travel, and avoid carrying around a lot of cash. Most people aren't very good at paying off their credit card balances in full at the end of each month, so they end up paying interest on everything they buy.
Why interest rates on credit cards go up
Did you know that raising the interest rate on your credit card is a pretty common thing for most credit card companies to do? They can raise your interest rate if you've been late on a payment for ANY OTHER credit card or loan. This is called "universal default," and if you're late ONCE on one of your accounts, it's likely that your interest rate will go up on all of your credit card statements. Credit card companies can raise your interest rate because of the dreaded "anytime, for any reason" clause that is usually in the terms and conditions of credit cards.
Citigroup Inc. is helping people save money by getting rid of unnecessary interest rate hikes.
Citigroup Inc. credit card holders will no longer have to pay more in interest on their Citigroup cards because they were late on paying another bill. Under the "anytime, for any reason" clause, they also won't raise the rate. In fact, if you have a credit card from Citigroup Inc., the only time your interest rate will go up is if you make a late payment to your Citigroup account.
Issuers of credit will play "follow the leader"
It's likely that other credit card companies will follow Citigroup Inc.'s lead over time, since the credit industry as a whole is making a lot of changes that help consumers. If you don't know how your credit card company handles increasing your interest rate, just ask! If they do this or say they can raise the interest on your account at any time and for any reason, you might want to move your balances to a Citigroup Inc card, which could save you hundreds or even thousands of dollars in interest fees over time.
