This afternoon we received a “Notice of Change in Terms and Right to Opt Out from Citibank” in the mail. We’ve known that Citi would be increasing rates for a couple of weeks now, but we now have details straight from the horse’s mouth. All I can say is that… I sure am glad that we don’t carry a balance on our cards!
I’ve transcribed the entire letter below, but here’s an executive summary:
- Purchase APR is going up to a minimum of 16.99%
- Cash advance APR is going up to a minimum of 21.99%
- Default APR is easier to trigger, and increasing to a minimum of 23.99%
- Fees for foreign transactions are increasing (new 3% transaction fee)
- You can opt out of the changes, but they’ll ultimately close your account
Here’s the full text of the letter:
The Changes. We are changing you Card Agreement. The changes will be effective for all billing periods beginning on or after December 3, 2008. The changes will be effective whether or not you receive a billing statement.
I. We are changing how we calculate your variable APR for purchases:
We are increasing your variable APR for purchases. Your purchase APR will equal the U.S. Prime Rate plus 10.99% with a minimum APR of 16.99%. As of October 1, 2008, this purchase APR is 16.99%. This APR equals a daily periodic rate of 0.0465%.
II. We are changing how we calculate your variable APR for cash advances:
We are increasing your variable APR for cash advances. Your cash advance APR will equal the U.S. Prime Rate plus 16.99% with a minimum APR of 21.99%. As of October 1, 2008, this cash advance APR is 21.99%. This APR equals a daily periodic rate of 0.0602%.
III. We are changing the following sections regarding APRs:
Default APR. All your APRs (including promotional APRs) on all balance may automatically increase to the deafult APR if you default under any Card Agreement you have with us because you
- do not make the minimum payment when due,
- go over the credit line, or
- make a payment to us that is not honored.
The deafult APR equals the greater of (1) the Prime Rate plus 23.99% or (2) up to 29.99%. We set your default APR by reviewing the seriousness of your default with us and your credit history. The default APR takes effect as of the first day of the billing period in which you default. We may lower the APR for new purchases and/or cash advances if you meet the new terms of all Card Agreements that you have with us for six billing periods in a row. However, the default APR will continue to apply to your existing balances until they are paid in full, unless we tell you otherwise..
IV. We are changing how we calculate the fee for foreign purchases. This fee will be called the Transaction Fee for Foreign Pruchases. The description in your Card Agreement of this fee will be as follows:
Transaction Fee for Foreign Purchases. We add a fee of 3% of the U.S. dollar amount of each purchase made outside the U.S., whether made in U.S. Dollars or in a foreign currency. This fee is a FINANCE CHARGE.
RIght to Opt Out. to opt out of these changes, you must call or write us by January 31, 2009. When you do, you must tell us that you are opting out. Call us toll-free at 1-866-565-7030. (Please have your account number available.) Write us at Customer Service Center, P.O. Box 6218, Sioux Falls, SD, 57117-6218. Include your name, address, and account number on your letter.
If you opt out of these charges, you may use your account under the current terms until the end of your current membership year or the expiration date on your card, whichever is later. We will close your account at that time. You must then repay the balance under the current terms.
So there you have it… A bunch of negative changes for Citi cardholders. If you’re carrying a balance on one of their cards, then it’s probably time to start looking around for a 0% balance transfer offer. If you don’t carry a balance, then this really isn’t too big of a deal.