Citigroup Reverses 2007 Promise To Congress Not To Raise Interest Rates

New York, NY (AHN) - Citigroup announced it will increase rates for some of its credit card holders in the U.S. due to losses in its global card division.

According to the Wall Street Journal, Citigroup had informed some of its credit card holders they would have to pay an extra three percentage points, but less than 20 percent of its clients could be affected. As of the third quarter, the company has 182.7 million open card accounts.

A company spokesman explained Citigroup has not increased its rates for the past two years but because of significant consumer credit deterioration caused by the mortgage crisis and rising unemployment.

To survive the current economic crisis, Citigroup is cutting 22,000 jobs worldwide. So far it has removed 12,900 employees and may lay off 9,100 more in the next 12 months. The company has a total of 352,000 workers as of September.

Citigroup reported credit losses of $1.59 billion in the third quarter as more customers missed their payments while the company also wrote off some loans.

The announcement is a turnaround from Citigroup's promise to Congress early last year that it will not hike interest rates at any time for any reason in exchange for lesser federal regulation.