Released: March 02, 2007

Citi stops two abusive credit card practices

Source: Kathleen Day, Washington Post (Free Registration)

Citigroup, the nation’s second-largest credit card issuer, said yesterday that it will stop imposing two common interest-rate charges that consumer groups and some members of Congress have criticized as unfair and abusive.

Citigroup said it was halting a practice known as “universal default,” under which a cardholder’s interest rate on a Citibank card increases if the holder is late on a payment for another, non-Citibank credit card. Several major credit card issuers have universal-default policies.

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.”

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