Citigroup Layoffs Overshadow Interest Rate to Spike to Come for Some Card Holders

With so much bad economic news these days, the news of Citigroup layoffs may not be as shocking as it once may have been. According to the Wall Street Journal, this week starts the first of over 10,000 pink slips being given to Citigroup employees. The Citigroup layoffs affect employees not only in the United States, but throughout the world. The large scale Citigroup layoffs underscore that it is not just Americans who are suffering from large scale job losses.

While it is tempting to put the news of the Citigroup layoffs out of your mind, if you are a card holder, the Citigroup layoff news may be overshadowing the fact that your Citigroup credit card rate may take a hike. CNN Money reports that up to 1 in 5 or 20% of Citigroup customers could face a rate hike of up to 3 percentage points. Perfect timing for those who use credit cards for gift buying during the upcoming holiday season.

What can you do if you receive notice of an interest rate hike on your Citigroup card?

The Motley Fool at Fool.com suggests that one need not be shy in attempting to negotiate with their credit card company. If a notice of a rate increase comes in your mailbox from Citigroup, take a moment to call the customer service number to inquire what you can do to remedy the situation. There are no guarantees that your card issuer will relent, but at the very least, they may be able to explain why your interest rate increase was so severe. Did you miss a payment? Did you send one in late? Both can give credit card companies the right to raise your rate. Even paying a utility bill late can net you an interest rate hike, which is why some in Congress are pushing for reform. Threatening to transfer your balance to another card in the current credit crunch may be met with glee, so use that threat only if you mean it.

Personal experience with negotiating a lower interest rate

Several months ago, I noticed the rate on our Discover Card was higher than I'd remembered. Since we don't carry a balance on the card in general, I cannot honestly be sure when the rate hike had occurred. A quick call to the customer service and blatantly asking for a lower rate did net a drop of a few percentage points. The representative conceded that our account was in good standing and that a lower rate was available. The lesson learned here is that just because a lower rate is available doesn't mean the credit card company will automatically apply it to an account without a customer request. So pull out those credit cards and at least ask for a lower rate. The worst the credit card company could say is no.

Sources:

http://online.wsj.com/article/SB122661650122026201.html

http://money.cnn.com/2008/11/14/news/companies/citigroup_layoffs/?postversion=2008111412

http://www.fool.com/personal-finance/credit/get-it-done-negotiate-with-your-lender.aspx

Personal experience