Credit card rate increases coming

As if anyone needed a reason to put away the credit cards this holiday season, here's a great one: Citibank plans to raise interest rates on credit card holders. Well, some credit card holders: an estimated 10 million customers whose rates haven't gone up over the past two years.

Citi is raising rates by 2 or 3 percentage points, so if you have a card with them with an 18 percent APR, you'd be at 20 or 21 percent after the move. Of course, it's all being done because of the hits the company is taking in its credit card business, which makes it likely that other card issuers will do the same since they're all taking hits.

Now, if you're thinking like I'm thinking, something's not quite right here. There are many reasons why card companies raise rates on customers with variable rate cards: the underlying short-term rates the banks pay its lenders might rise, for example, or you might pay your bill late and end up slapped with a higher rate as a penalty. But interest rates are generally low right now, and if you haven't had a rate increase in two years, that suggests you're either not carrying a balance or you've been paying on time.

So Citi seems to be taking a pretty naked, across the board increase here. There are, however, ways to get out of paying it: if you have a card, you can reject the increase in writing but you'll have to find a different card when this one expires.