

Ask HN: Startup to renegotiate CC interest rates on behalf customers? - malandrew

In late 2009 Citicard jacked up my interest rates to 29.99% via a change in my cardholder's agreement. This was my reward for being a loyal, responsible paying customer since 2001.<p>Now between this, social commerce sites like Groupon and Woot!, and the fact that my dad's job is to renegotiate millions of dollars in debt with banks on behalf of large companies, I was wondering if it would be possible to use social network effects to renegotiate interest rates with each issuer on behalf of users and organize a monthly payment strike against issuers that do not lower rates.<p>Basically the site would ask users to supply their name, the first 6 digits of each credit card and the amount of debt on each.<p>FYI, the first 6 digits are known as the IIN, which identifies the issuer.<p>When the collective user debt for a specific credit card issuer gets high enough, the startup would organize a campaign to threaten to go on strike by a certain deadline if the issuer refused to lower APRs.<p>The target APRs to be negotiated would not be defined such that it would put credit card companies out of business. Instead they would be set to forcefully keep issuers honest. Different APRs would be set according to each users credit rating. i.e. a user with a credit rating of 750 might be entitled to Prime + 5.99% while someone with 720 might be entitled to Prime + 7.99%<p>235 million Americans have credit cards. There is certainly a market for this idea.
======
byoung2
_threaten to go on strike by a certain deadline if the issuer refused to lower
APRs_

That's an empty threat...the only way to get out from under the credit card
company is to pay off the debt or transfer to another card. If you can
transfer to another card with a lower rate, do it. If you can pay off the
debt, do it.

FYI, the credit card companies don't just raise your rate to 29.99% for no
reason. They only do that when you are late or over the limit. If you are a
customer in good standing, just call them up and ask for a lower rate. I've
lowered my rates in the past from 15% to 7% just by asking. Nowadays I don't
carry a balance, so I couldn't tell you what my interest rates are.

~~~
malandrew
Actually I did eaxctly what you suggested and contacted them to lower my
rates. After escalating my inquiry all the way up to CEO Vikram Pandit, I
learned that they do just change the rate to 29.99% for no reason. Here is the
email I received today from a Citibank representative after sending an email
to Vikram Pandit inquiring what I had done to cause my rates to go up.

"Thank you for your recent email to Mr. Pandit. Since your inquiry is related
to your Citi(r) Bronze(r) / AAdvantage(r) card ending in XXXX, he has asked
that I respond on his behalf.

Unfortunately, my recent attempts to contact you by telephone were
unsuccessful. I certainly regret any inconvenience or difficulty you may have
experienced in your attempts to request a reduced Annual Percentage Rate (APR)
through our Customer Service area. Our goal is to serve our customers by
providing superior service and products. One of the best ways to achieve this
goal is to receive feedback, both positive and negative, from our customers.
As the quality of the service we provide our customers is of great importance
to us, I have forwarded your comments to management for review.

Our records indicate that in October 2009, your account was included in a
Change in Terms to the Card Agreement, which proposed to increase your APR
from Prime + 9.99%, currently 13.24% to Prime + 26.74%, currently 29.99%. We
consider a number of factors when changing terms. In order to continue to
provide consumers with access to credit, we need to operate under revised
terms, which include an APR change. These changes are being made due to the
fact that our cost of doing business continues to be impacted by the
challenging market conditions. Based on this total picture, we establish what
we believe is an appropriate price for our products. While we realize you are
not satisfied with the new terms, we believe the new terms are consistent with
the current market conditions. As explained in the notification sent to you,
cardholders were provided with the opportunity to opt-out of the Change in
Terms, which would have immediately closed your account but allowed you to pay
any outstanding balance under the prior terms. Our records do not reflect
receipt of your opt-out notification; therefore, the new terms became
effective on your January 2010 billing statement."

You should also check out this article on Business Insider:

[http://www.businessinsider.com/citi-customers-reach-out-
to-u...](http://www.businessinsider.com/citi-customers-reach-out-to-
us-2009-10)

Apparently this was done to "force" to close their accounts according to one
former Citibank employee who commented on the article.

~~~
byoung2
_Apparently this was done to "force" to close their accounts according to one
former Citibank employee_

So that's what is happening. This sounds similar to what Amex did last year,
except they paid people to leave instead of muscling them out:
[http://blogs.wsj.com/wallet/2009/02/23/american-express-
payi...](http://blogs.wsj.com/wallet/2009/02/23/american-express-paying-
customers-300-to-leave/)

