Does universal default affect you? Citi Cards stops universal default on its Citi-branded credit cards.
Citi said it will not “voluntarily” raise the rates and fees on credit card accounts until the credit card expires and a new card is issued. Citi explained that the only reason for a rate or fee increase prior to card expiration would be due a customer’s late payment, exceeding the credit limit, or payment by a check that bounces.
Additionally, for a credit card APR linked to the prime rate, Citi indicated that the rate would only change based on upward or downward movement of the prime rate.
Earlier, a memo from Citi on the American Banker’s website outlined the credit card issuer’s plans.
Citi’s memo explained that, while “[t]his has been a standard business practice across the industry since the inception of the credit card business…we understand that customers view the right to change prices as unfair and one-sided.”
Ahead of the memo, on Feb. 28, 2007, Senate Banking Committee Chairman Christopher Dodd had announced that a major credit card company was close to publicizing a decision about ending a certain practice. However, at that time, Dodd did not provide additional details.