Citibank closing hundreds of credit accounts, unannounced

By Joe Byrne
Tuesday, October 20th, 2009 -- 6:30 pm
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citibank logo1 Citibank closing hundreds of credit accounts, unannounced A business decision by Citibank has some experts scratching their heads. An unknown number of credit card accounts, co-branded with oil companies like Shell and Exxon-Mobil, have been closed by the creditor.

After filling up her gas tank, Shannon Burdette was confused when she was told her card had been rejected. AP reports that she called the customer service line on the back of the card, but was told her account was closed because of something that appeared on her credit report. The only negative statement on her report was the notice of closure by the creditor's request.

Citibank's reason for taking action against customers is unknown. The bank's spokesman declined to give an explanation for the massive closure, according to American Banking News. A statement issued by the bank pointed out that they “continuously evaluate their products.” Estimates for the number of account closures are in the hundreds.

A card being closed has the potential to damage a person's credit rating. If a customer had a high credit limit on their closed account and a high balance in another line of credit, the “utilization ratio” drives the customer's credit rating down, according to John Ulzheimer, president of educational services for Credit.com.

No law, including the recent Credit CARD Act, prohibits banks from closing credit accounts, even if no warning is given.

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Citibank mailed out the closure letters only two days before the accounts were closed. Accounts affected include Mastercards co-branded with Shell, Exxon-Mobil, Citgo, and Phillips Conoco-66.

Citibank posted $8 billion in losses for its third quarter report last week. Like most banks, Citi expects defaults on credit cards to rise in the next few months. Before the announcement of account closures, analysts noted that the bank has “sharply reduced its outstanding credit to customers,” according to AP.

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Story comments are below...
  • Michael G.
    My bank decided to raise the rates on my credit card from 9.8 percent to 24.9 percent. I paid the full balance of $221.00 immediately and decided that since they didn't appear to appreciate my business, I would close my personal and business accounts with them.
    I withdrew $438,982.41 and opened an account with a competitor bank. My new credit card with the new bank has a 6.5 percent rate, guaranteed for 10 years. I'm also being paid interest on my money now instead of having to pay for the pleasure of having an account.
    If you are not happy with a bank's actions, then go elsewhere. There are still some banks that appreciate your business, and they will treat you like royalty.
    In my town, we also have a retail store that is owned by a local family. They are competing with 3 nearby Wal-Marts. The owner now has a policy that he will match Wal-Mart's price, even if it costs him money from his own pocket. His business has picked up so much that he's looking to open 2 more stores soon, and guess what...he's not losing any money. If he loses a few dollars on one item he makes it up on other items because people are buying so fast he cannot keep the shelves stocked. He's had to hire additional employees to cope with the increased business. Meanwhile, the Wal-Marts have had to layoff some employees because business has slowed for them.
    Go with a business that shows you they appreciate you. I'm glad I did!
  • Westcoastliberal
    Citibank sucks! What we need is a good old fashioned DEBTOR'S REVOLT!
  • katiebegood
    I had a Citibank credit card and have tried numerous times to close it. They refuse to do so. I find it amusing that they are closing accounts for others when they refuse to close mine!
  • Wildcat
    If you have an account with Citibank or Skank of America, FIRE THEM. There are a few other credit card outfits that, while they're still part of the problem, are nowhere NEAR as toxic as these jackasses are. If you actually have a checking or savings account, just withdraw everything and open them with a local bank or credit union.
  • Independentgal
    Great post! I'm all for dealing with local banks and especially credit unions. I've had an account with a credit union for 30 years now, and I have a MasterCard through it that doesn't cost me any fees (other than interest). No yearly charges, no other unknown, hidden fees.

    We need to stop giving these big banks our business and deal only with local banks and/or credit unions.
  • katiebegood
    Go to a credit union. I've been doing business with credit unions for over 20 years and have zero complaints. The only credit card I use is through them and it carries a 7% interest rate. Since I pay it off once a week, that's of no consequence to me. But I like the fact that I know my financial institution is not there to rip me off.
  • MarxyMcLiberalson
    They hiked my Sears card to $29.99% I had no balance, I dont care. Im going to cancel the account now.
  • dennycrane
    This just saves you the pleasure of cutting up the damn cards with scissors.
  • dporteraustin
    Fuckers. we should all use cash.
  • katiebegood
    I can't pay with cash because that darn cash seems to jump out of my pocket. But, I use my one credit card (through a Credit Union) for all my purchases and once a week I transfer money from my checking to the card to pay it off. Works great. It just takes determination to make sure I never let that balance go unpaid.
  • afblac
    Fortunately, I do not have a Citi credit card or any dealings with Citi, but if I did, I would immediately close the account so that it was me canceling the card and not the creditor. I would assume they will loose a lot of good credit-worthy card holders when word gets out. Why would you put yourself in a vulnerable position to have your credit harmed when you have not defaulted?
  • billfromny
    Another fun one is that Citibank will reduce your credit limit from $4000 to 400.00 without telling you. And then when you call about why your card is rejected, they tell you what they did, and then they make it sound like they're doing you a favor by not charging you over-limit fees because your balance is 660.00, a balance created when you had your 4000.00 credit limit!

    Don't let them get away with it! I hope soon that this crap blows up in their faces big time, but we have to make the effort ourselves. HSBC and Citibank need to go belly up!
  • sj_tg
    There are also non-gas cards that got closed too. I've heard various people complain that their personal credit accounts got closed by Citibank. They are purposefully damaging people's credit rating. This has got to be illegal.
  • alexpatrol
    It's time to end the reign of the credit report, meanwhile. Especially as tactics like these increase. Consumers have no recourse to correct something like that. Credit reports need to be regulated if they are going to be so widely used.
  • nina13
    They have been doing this for a while now. i was sent an opt out agreement for one of the platinum cards i had had since 1997, late last year. so i transfered the balance to a shell card in november of 2008 to then get another opt out letter for the shell card. I call customer service and they give me no other choices but to take a higher interest rate or close account, after they had given me a lower interest rate. I call this bad business. This all started when the government said that the new legislation was going to be more strict. So i guess they are trying to make their money by using any tactics they consider good business?! So i guess now they cancel your credit cards without the card members authorization. That is just plain WRONG! Meanwhile, they are deliberately damaging our credit, because every time they close a credit card it reduces your overall credit. So much for building good credit to than have your own banks and credit card companies damage it. HSBC just closed my account because I as a good customer paid off my balance and haven't used it for almost a year. They just sent me a letter with their decision. Meanwhile, they carry on with the bad business tactics and we tax payers keep on bailing them out. This has to stop.
  • gjrsa
    Just yesterday Citibank hiked my APR from 15% to 29.9%. I have had the account for 22 years with an exception payment history. When I called I was told that they would happily reinstate my rate as long as I closed my account. So I CLOSED it immediately! Citibank must be justifying its "bailout" money by offsetting it against closed accounts. There must be some underlying benefit to these SOB's!!
  • peterlawrence
    Rawstory, please remove the foul and disgusting dennycrane comment and find out why "report" and "more v" doesn't open.
  • lunaursus
    And now it begins. Consumers will now learn that there is no protection for them in the laws. The laws have been fashioned to only protect the banks, compliments of your representatives who took campaign money from the banks.
  • j. boone
    The gas companies need to punish citibank as this directly affects their sales and profits. any of these companies that have accounts with citibank needs to close them without notice .
  • Christina
    Alas, it does not matter WHO closes the account, it will still lower your credit rating. I expect that we will see quite the backlash against credit scores in the next couple of years, because they will be rendered completely unreliable by the actions of Citi, et al.
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