Capital One, Citigroup ripping off customers with credit card APR hikes

You would think the banking industry would have learned a few lessons from their bad policies of the past several years.

You would think the banking industry would be gracious enough not to spit in taxpayers' faces by taking our money AND by raising interest rates on credit cards.

Last year the government proposed new guidelines to protect consumers from predatory banking credit practices but the banks were given 18 months before the new rules take effect in 2010.

Now that the Obama administration has orchestrated the largest bank bailout in U.S. history, companies like J.P. Morgan Bank, Citigroup (Citibank), and Capital One are going to take the money and raise interest rates anyway.

If you've been enjoying a 9.9% interest rate or lower on your credit cards, say good-bye by low rates. Even though the Federal Reserve is keeping interest rates low for banks, the credit card issuing banks like Capital One, Citibank, and J.P. Morgan have decided to raise interest rates (doubling or tripling them for all customers).

Some banks are also announcing new payment terms -- changing due dates, increasing minimum payments, and otherwise making it more difficult for their customers to pay off their credit cards. Quite a few people speculate the banks are doing this to drive away consumers who keep high balances.

You do have the option of rejecting the higher interest rate and closing your account. If you do so, however, you will hurt your credit score because you'll be reducing your available credit without reducing the amount of money you owe.

It would be better to find another bank willing to give you a balance transfer and low introductory interest rate. Moving your debt to a new credit card will help protect your credit score. It will also punish the bank that raised your interest rate.

But you can do more than that to hurt the banks like Capital One, Citibank, and J.P. Morgan. You can complain to your U.S. Representatives, your Senators, and your states' Attorney General and ask them NOT to help banks that have raised interest rates for their customers.

The banks are handing consumers a TAKE IT OR LEAVE IT ultimatum. They are not willing to negotiate or work with the general public. They clearly are too stupid to act in the economy's best interest by keeping interest rates low. So the banks don't need our sympathy or our help OR our money.

Demand that your U.S. Representatives and Senators take back whatever Federal aid was given to the banks in the bailout if the go through with the rate hikes and other plan changes.

Demand that President Obama take punitive action against any bank that alters its credit terms in this usurious fashion while accepting Federal bailout funds.

Help promote any lower interest rate bank card that is accepting new customers, especially if people can get the cards without having pristine credit.

And here is another way you can help yourself: pay off your high interest rate card as soon as possible. While it's a very bad idea to sell off the mutual shares in your 401(k) plan for an emergency loan, if you have adjusted your regular contributions so they go to the Money Market or Liquid Asset fund in your plan you may have enough money to borrow against your 401(K) and pay off at least some of your credit card balance.

If you have a Universal Life policy, you may also be able to borrow money against that to pay down your credit card debt.

The good thing about borrowing from your 401(K) or Universal Life policy is that the interest rates will be lower than most credit cards and you pay the money back to yourself. The bad thing about these kinds of loans is they can cause you more financial distress if you are not careful.

Whatever you do, don't take these rate hikes and changes in payment terms just sitting down. Take action. Do something to let the Congress and the President know you're not happy about the cheating, swindling behavior of the banks. They should not be bailed out if they are going to raise interest rates on their customers like this.

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