Citigroup has decided to raise interest rates on credit card accounts in a move which is expected to affect as many as 15 million US customers, according to a report in Financial Times.
The hike is interest rates on credit cards is being seen as part of a strategy to raise revenues before a legislation barring such hikes kicks in from 2010. Citing sources close to the decision, Financial Times reported that the rise in interest rates will make credit cards more expensive for at least 13 to 15 million customers since Citigroup co-brands with customers of many popular retail chains like Sears.

In a statement Citigroup claimed that the rise in interest rates was in keeping with “regular account reviews” and was in part motivated by increasing business costs so as to keep credit channels free in the consumer market. The company also announced that it was selling off 34% stake to the US government under the terms of a financial rescue package agreed with federal agencies.

In May this year, the Credit Card Responsibility, Accountability and Disclosure Act 2009 were passed in the US under the guidance of President Obama. The Act will help control finance industry practices and make it difficult for lenders to adjust risk-based pricing.