Citi's 'Earn Interest Back' Offer Requires Hefty Monthly Spending

citibankCitibank is offering their customers an “earn interest back” option to offset higher interest rates.  The catch: they need to spend as much as $1,000 minimum every month to get a 10 percent reduction of the interest charge.
The offer is being mailed out to Citi customers this week, along with “changes in account terms” that includes hikes in APRs for purchases.
One Citi customer showed his letter to eCreditDaily.com. The card holder, who is in good credit standing and pays more than the minimum required every month, was informed that his variable rate was jumping from 14.99 percent to 18.99 percent, taking effect Dec. 29. The Citi customer is carrying an approximate balance of $1,800.
“Charge $1,000 or more in purchases,” the Citi account letter reads, and “you’ll receive a credit on your billing statement equal to 10 percent of your total interest charge on your purchase balance.”
If the customer starts earning interest in December and January, he will see the full credit on his statement “no later than February 2010 and monthly after that,” Citi states.
The much-anticipated Credit CARD Act of 2009, sweeping reform laws that impose rate and fee restrictions on card issuers, is slated to take full effect in February.
Citi is providing customers an “opt out” option, allowing them to pay down current balances with current interest rates. If they opt out, they may use their “acccount under the current terms” until the end of their current membership year or the expiration date on their card, whichever is later.
Citibank is the second largest, general purpose credit card issuer in the U.S.
Citi’s rate hikes is one of a string of rate increases, lowering of limits and outright account cancellations by the major card issuers over the past several months. The actions are fueled by the perceived need for more revenue-generating strategies ahead of the reform laws.
Last month, Bank of America said it was testing accounts on which to charge annual fees of between $29 and $99. Some card issuers are raising rates as high as 30 percent, regardless of the payment history or credit-worthiness of customers.
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