Credit Card Rates Going Up: Pay Those Balances!

We still haven't seen the job losses that Governor Rounds insisted would happen if Congress passed the new credit card rules. (Ah, just wait: the law is still young.) But we do see credit card companies jacking up their rates before the new law clamps down on their usurial powers. The biggest goguer, Citigroup, just raised rates on 15 million cardholders. Their rationale:

We have adjusted pricing and card terms for some customers as part of our regular account reviews. This is an ongoing process to ensure we offer terms, interest rates, credit lines and products based on individual needs and risk profiles. These changes also reflect the dramatically higher cost of doing business in our industry as we work to preserve the broad availability of credit [Francesco Guerrera, Saskia Scholtes, and Tom Braithwaite, "Citi Raises Card Rates on Millions," Financial Times, 2009.06.30].

Translation (Google Translate really needs a PR-spin-->English setting):

We've jacked up rates because we're always looking for ways to make more money. We use all the tricks at our disposal to respond to the individual needs of our executives and the risk we face of going under from all those stupid loans we gave out during the housing boom. Without the easy money of subprime loans and the new law banning our worst practices, we've got to squeeze our customers as much as we can now, but it's our patriotic duty to make credit available (for as big a fee as we can charge), so kiss our keesters.

But remember: those rates hikes won't affect you if you just keep paying your balance. Easier said than done, I know, but you can do it! Use that credit card for convenience, not long-term loans!