Citigroup raises credit card interest rates

Citigroup Inc. is raising rates for some of its U.S. credit card customers after losses in its global card division skyrocketed.

Earlier, The Wall Street Journal reported that Citigroup is telling some credit card customers that their rates are being raised by an average of three percentage points and that less than 20 percent of the bank's customers could be affected, citing a person familiar with the company's strategy.

The move comes as the financial services giant looks for additional ways to return to profitability, including continuing to cut jobs under a previously announced plan.

The downturn in the economy has led to rising defaults on all types of loans this year, such as credit cards. Credit losses in Citigroup's global card division rose to $1.59 billion in the third quarter from $1.05 billion during the same quarter in 2007, as more customers missed payments. Credit losses include loans written off as not being repaid. Overall, the card division lost $902 million in its card division during the third quarter. It earned $1.44 billion in the unit during the third quarter in 2007.

Customers will be able to opt out of the changes and instead use their cards until they expire. People who opt out can pay down balances under the old terms, the company said.

The company is dealing with broader problems in its operations amid the ongoing credit crisis. It has reported an overall loss each of the last four quarters, including a loss of $2.8 billion during the third quarter.