Credit Losses


ADVERTISING DISCLOSURE: is an independent, advertising-supported web site. receives compensation from most credit card issuers whose offers appear on our site. Compensation from our advertising partners impacts how and where their products appear on our site, including, for example, the order in which they may appear within review lists. has not reviewed all available credit card offers in the marketplace.

Credit Losses

The content is accurate at the time of publication and is subject to change.
Credit Losses
This content is not provided by Citi. Any opinions, analyses, reviews or recommendations expressed here are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by the Citi.

As anticipated, the credit card crisis has led to the worsened situation in the US economy and the growing distrust to it on the part of European markets. It has caused the Federal Reserve System and the government to think of some radical measures to bring relief and get back on track.

As far as the Federal Reserve is concerned, it has announced the reduction of the fed funds rate to make credit a bit cheaper and to allow debtors settle their debts. The fed fund rate and prime rate reduction will be the most favorable time for customers to pay off their huge balances accumulated in an attempt to do away with a mortgage burden.

So, banks are reducing their prime rate, the interest rate at which they issue credit to their customers, giving them a new hope. Helping credit consumers achieve a healthy personal economical ground, banks and credit companies contribute to the US economy recovery. However, Citigroup, one of the largest issuers in the USA, has a different policy.

So, while such companies as American Express and Discover are lowering their interest rates to make things easier for the public and enterprises, Citigroup is going to compensate for the enormous losses it has incurred because of giving easy credit to customers with weak credit.

Being forced to make an $18.1 billion write-down recently, Citigroup is now intending to avoid a possible risk in the future through raising rates and reducing credit limits.

So, who suffers most from this tough measure? The rates rise will most likely be implemented in the states that accounted for most part of the Citigroup's credit card losses. They are Florida, California, Arizona and some more.

Now, if you want to apply for a Citibank credit card, be it a business credit card or one for students, you will face harder requirements to qualify and you will probably be eligible for a smaller credit line. However, this applies mostly to customers who are a bad credit risk in the eyes of the lender and who may start defaulting on their credit cards.

Good credit customers with a long payment history and no missed or delayed payment records in the credit report may count on the preservation of the existing rates or their reduction.

The multibillion write-off done by the Citigroup is not the only reason to tighten the amount of credit issued and toughen the application requirements. Because of the gross losses, Citigroup's shares have also fallen, incurring a 7.3 % loss and making the price less that half of what it was a year ago,

So, the company is losing its funds, together with its share buyers' trust. In order to raise finds, Citigroup plans to sell its convertible preferred stock, using the revenues to finance the public and investors. But if the stock is sold at a low price, it won't do any goof to the shareholders actually.

The other issue that worries share buyers is the reduction of Citi's dividend by 41%. Any stock buyer has an income level higher than 32% a quarter offered by the company. What's more it may be a sign of capital losses and maybe the elimination of the dividend at all like it happened in the early 1990s.

So, Citigroup has had enough of trouble recently and the credit crisis aggravates things. However, creditworthy customers should not be frustrated about the bad developments in the company. They will always have the best terms, conditions and rewards being a stable source of revenues for their creditor.

Disclaimer: This editorial content is not provided or commissioned by the credit card issuer(s). Opinions expressed here are the author's alone, not those of the credit card issuer(s), and have not been reviewed, approved or otherwise endorsed by the credit card issuer(s). Reasonable efforts are made to present accurate information, however all information is presented without warranty. Consult a card's issuing bank for the terms & conditions.
All rates and fees, and other terms and conditions of the products mentioned in this article/post are actual as of the last update date but are subject to change. See the current products' Terms & Conditions on the issuing banks' websites.
Add to Favorites:
Get the latest news, articles and expert advice delivered to your inbox. It's FREE.

Related Research:

Top 5 Cards for Travel from Our Partners: Winter 2019 – Expert’s Choice

Top 5 Cards for Travel from Our Partners: Winter 2019 – Expert’s Choice

Posted: December 17, 2018

Nights are still drawing out, the wind is cold, and the air smells like snow already – the winter is close. Christmas and holiday season are approaching swiftly, and overwhelming gift ideas are swirling chaotically in your mind. Ready or… Continue reading

Credit Card Tips For Holiday Shopping 2018

Credit Card Tips For Holiday Shopping 2018

Posted: December 15, 2018

November and December are the busiest months as gift shopping reaches its peak. People rush around looking for the best gifts and the best deals leaving a lot of money in the shops. Holiday season may force you to go over the household… Continue reading

Credit Cards to Save More on Holiday Shopping

Credit Cards to Save More on Holiday Shopping

Posted: November 25, 2018

Discounts and special offers are available all year round. Werther you are a bargain hunter or an impulse buyer, make sure you check online discounts and special offers. Also, if you are a cardholder, see if your credit card opens the door… Continue reading

You've successfully subscribed!

Please specify the following:All these fields are optional

Your Credit History
Themes you are interested in:

By providing this information you help us make our news letters more useful and informative. Thank you!