MISHAWAKA — Just in time for the holiday shopping season, paying for those gifts with plastic this year could cost you more.

Banking giant Citigroup plans to raise interest rates for customers who haven’t seen an increase in at least two years. Executives blame the hike on a difficult economic environment. The company lost $1.59 billion in the third quarter of 2008 and economists say Citigroup isn’t alone.

"Partly with just the tightening of credit markets, banks are struggling with increased defaults and delinquencies because of high unemployment,” said IU South Bend Economics Professor Grant Black. “With those kinds of factors, they could be facing pretty big losses.”

So those banks are turning to credit card customers to help make up some of the difference. 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.

“A lot of times I think people are unaware that credit cards can change rates for anytime for any reason,” said Black.

But getting a lower rate isn’t always difficult. Experts suggest calling your bank and simply asking for a lower rate.

Citigroup spokeswoman Jeanette Volpi said customers affected by the increase can opt out if they’d like, “and continue using his or her card until it expires. The cardmember will be able to pay down balances under the old pricing terms.”

But for Mindy Evans, who was Christmas shopping at University Park Mall on Monday afternoon, interest rates are a non issue.

“We pay our credit card bill off every month. Otherwise you get into trouble,” she said.

The full statement from Citigroup emailed to WSBT Monday afternoon:

"In this difficult market environment Citi is continually evaluating its business to ensure that it is performing as effectively and efficiently as possible. The industry has recently experienced an unprecedented market cycle with severe funding dislocation and significant consumer credit deterioration driven by the mortgage crisis and rising unemployment.

"In light of these unprecedented developments and others, Citi will be repricing a group of customers in our Citi-branded consumer credit card business in the U.S. to appropriately manage these risks. These customers base rates (purchase and cash usage APRs) have not been repriced in at least 2 and in many cases 3 years, and each customer will have the ability to opt out of the repricing and continue using his or her card until it expires. The cardmember will be able to pay down balances under the old pricing terms. We are carrying out this repricing in order to continue lending in this environment.

"At Citi, we remain committed to serving as an advocate for our customers, offering them a variety of tools and resources to use credit wisely. We encourage our customers to contact us with any questions or concerns. As a leading advocate for industry best practices, Citi continues to support efforts to increase transparency within the industry so that clients can compare the terms and practices of credit card lenders and make informed decisions."

--Jeanette Volpi, Vice President, Public Affairs, Citi