Citibank MasterCard - for me it started years ago like many others. The 0% offer in the mail and the 1% cashback, and I was in the game. Fast-forward a few years and the cashback is still there but I just received a notice that the interest rate on the card will soon be 23.99%. It hasn't happened abruptly. First it was 5%, then 9%, then 13%, then 17%, then 20%, and now 24%. What is it with the 0.99%? Do they think that consumers are stupid?
Ok, I'm not exactly a profitable customer for these guys. I never carry a balance. Yes, they make a marginal profit from merchant charges, of which they return 1% back to me, and who knows how long that's going to last. But with new consumer protection laws looming the banks have just gone wild, hiking fees and charges and interests all over the map. Why stop at 24%? Why not 50% or 100% or even 10,000%?
But wait, it gets even better. The letter states that if the account is in good standing and there are $1,500 or more in monthly charges, they'll credit 10% of the total interest for the given month. "This can offset the increase in your purchase APR.", the letter states. How kind of the bank to make this generous offer.
First of all, the naïve customer may think that the bank will drop the interest rate from 24% to 14% - hardly. That's 10% of the 24%, for the grand total of 2.4% in credits. In other words the interest rate will be 21.6%. Second, who has the time to spread out the charges every month in a precise manner to take advantage of the credit? Third, who is going to make certain that the bank is actually abiding by this rule? I'm sure the rules are so complex that the bank will never have to honor the credit. And last, as stated in the letter, "We reserve the right to change or end this program with 30 days' prior written notice." In other words, good luck getting a dime back.
There are some who advocate ditching credit cards altogether and paying everything with cash instead. It's a great idea on the surface, but hardly practical. The banks have rigged the system so well that a cash-only lifestyle in the modern world is all but impossible. Try to book a flight, rent a car, reserve a hotel room, or shop online and you'll be running back to the credit card with your tail between your legs. Use a debit card? Good luck getting your money back when a hacker empties your bank account and vanishes into the ether.
For now the only thing you can do is to use the credit card sparingly, pay off your balances every month, and just try to stay one step ahead of the banks as they continue to change the rules of the game in the hopes of tripping you up.