Well, it looks as if all of the attention Congress has been paying to credit card companies and their questionable practices is starting to make some changes happen. Recently, Citi Financial Services announced that they will be making some pretty dramatic changes to their rules and policies. And, you may be surprised to learn that these changes actually favor cardholders rather than the company.
On March 1, the company announced that it will no longer utilize their “universal default” policy that has been in place for some time now. In case you aren’t familiar with universal default, this is just one more trick the credit card companies have used over the years in order to suck more money out of your pocket. Credit card companies have utilized universal default as a means to raise your interest rates if you happen to make a mistake with another credit card. In other words, if you pay one credit card late, another credit card can use this late payment as the basis for raising your rates on their card.
It’s not really fair to assume that because of a single late payment or an oversight of some sort that you should have to be penalized across the board with increased universal default rate hikes. After all, if you haven’t made a mistake with that card, why should you pay for a mistake you haven’t yet made with another? It’s akin to getting an increase in your electric bill because your gas bill was paid late.
And remember, if your Citi card has a variable rate, which it more than likely does, it will still change in accordance with any changes in the Prime Rate. And if you allow your credit card to expire without using it, the terms may change as well.
According to Citi, these changes are being made in an effort to “put our customers first,” which we wholeheartedly applaud. But, the discussions recently taking place in Congress have probably spurned action by Citi and other card issuers.
Regardless, it’s nice to see the needs of cardholders being shoved to the forefront.
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