Citi has made significant changes to two of its major policies regarding its credit card business, as part of its commitment to improve its services and business practices.
The banking group has confirmed that it will dispose of its ‘universal default’ policy, which involved the industry practice of increasing rates for individual cardholders due to their defaults on financial commitments with other parties. Citi had already been giving customers the right to opt out of any such increase, but has now abandoned the practice for all customers.
Citi is also eliminating its ‘anytime for any reason’ increases to the rates and fees of its customers’ accounts, which would usually allow credit card issuers to increase the rates and fees of a cardholder’s account at any time for any reason. As a result of the new policy, Citi will not voluntarily increase the rates and fees of the account until the card expires and a new card is issued, typically two years.
Increases in rates and fees will only occur in the event of a customer making late payments, exceeding the credit limit or paying with a check that bounces.
Responses have been positive, with John Taylor, president and CEO of National Community Reinvestment Coalition, stating: We applaud Citi’s move to eliminate ‘universal default’ and ‘any time for any reason.’ Clearly this raises the bar for the industry and protects consumers in a way that other credit card issuers do not.