by Joseph Kenny | 11/5/09

Credit card companies are forging ahead with new and higher interest rates and other fees. Consumers opening their credit card statements need to read the fine print very carefully and look at the interest rates being charged. Some companies give consumers plenty of notice about interest rate increases, but others try to pass the increases on with as little fanfare as possible.

Recently Citibank chose to announce it is increasing credit card rates to as much as 29.99%. It’s hard to believe anyone would use a credit card with this kind of interest rate unless it was possible to pay it off each month.

Yet as the credit card companies know quite well, you almost have to have a credit card of some kind in today’s economy. For those consumers who have questionable credit and limited options, the exorbitant credit card fees must be accepted.

Though it’s easy to single out Citibank, many of the credit card companies are doing exactly what Citibank is doing – raising interest rates and account fees. Citibank has been in the news for two main reasons. First is the fact Citibank has not tried to hide the fact it is raising rates and fees. Second is the fact that Citibank still exists because of the largesse of the taxpayers having received over $300 billion in bailout funds.

So taxpayers save the company and the thanks they get are interest rates of 29.99%? That is exactly how many consumers are viewing these higher rates. New federal rules are about to become effective as to how new rates are instituted but they do not limit the interest rates allowed to be charged. And what is upsetting consumers is the fact the credit card businesses like Citibank are trying to institute new fees and rates before the new rules take effect.

So what is Citibank up to? The company is raising the variable interest rate to as much as 29.99% Average Percentage Rate. Citibank is closing some accounts without adequate notice being given to consumers. Most of those accounts to date have been oil partner co-branded credit card accounts like Shell and ExxonMobil.

You would think only delinquent accounts would be closed, but that is not the case at all. It’s possible to imagine the surprise of someone in good account standing filling a gas tank and then discovering the gas credit card has been cancelled.

In addition, Citibank has instituted a new annual fee to be charged on credit cards that accumulate less than $2,400 in charges each year. The fees will range from $30 to $90. People who only use their credit cards for emergency purposes or even just use them sparingly will have to pay a fee that more frequent card users will not have to pay.

As was pointed out, Citibank is certainly not the only credit card company to raise interest rates or add new card fees. Most of the others are or will follow suit. In fact, Wells Fargo and Bank of America are also initiating fee schedule changes that will make their credit cards more expensive to own or use.