Citigroup to Ease Credit Card Penalties and Fees

Citigroup announced that it will ease up on credit card penalties, including the elimination of the universal default rule while also ending the policy of “any time for any reason” increases in credit card interest rates, a rule based mainly on changing market conditions.

Citigroup has decided to eliminate the universal default rule which allows credit card issuers to raise interest rates on unrelated credit card accounts if the card holder defaults on any other credit card.

They also announced that they will only raise credit card interest rates when a credit card is renewed, or for late payments, overdrawn accounts, or bounced checks.

The news came after scrutiny from the U.S. Senate, which highlighted the hidden fees charged by credit card companies, and the more than $17 billion that credit card companies charged in penalty fees during 2006.

The move seems to be a combination of customer service, and possibly a cautionary move by Citigroup to avoid any regulatory issues in the future.

It is unknown whether other major credit issuers will follow suit, although a spokesman for American Express claimed that they didn’t charge for universal default to begin with.

Related Topics:

1. U.S. Senate Subcommittee Members Slam Credit Card Issuers
2. Higher Fees, Rates May Be Downside of Credit Card Rule Changes
3. Chase Eliminating Universal Credit Default Altogether
4. Fed Not Doing Enough to Improve Credit Card Disclosures, Practices
5. Chase Balance Transfer Fees Climbing to Five Percent