Mortgage Rates broke news of the hike
Hyundai Offers Buyers $1,000 or Gas at $1.49/Gallon

Hyundai is leading the auto-incentive pack once again. Beginning tomorrow, the South Korean automaker will launch their “Assurance Gas Lock” promotion,

An incentive that will offer new vehicle buyers either a $1,000 cash rebate or the chance to lock in gas prices at $1.49/gallon for one year:



With gas prices at $2.70, someone driving a V6 Hyundai Sonata, one of its most popular models, for 12,000 miles over the course of a year would save about $580 with the gas price promotion,

Given the Sonata’s EPA-estimated 25 miles per gallon fuel economy in combined city and highway driving.





Gas prices would need to average about $3.60 a gallon or more for a typical Sonata buyer to benefit from the gas card instead of the cash.



In the June 12 edition of their weekly newsletter, The Kiplinger Letter, the personal finance and business forecasting organization says that while they do expect oil prices to increase to $85 a barrel in the coming weeks,

“By year-end, oil will be closer to $65 a barrel, with gas near $2.25 a gallon.” That being said, we’re betting most will opt for the cash.



Hyundai’s latest promotion completes a triple threat for the automaker that’s looking to gain an even greater lion’s share of the automotive market.

The “Assurance Gas Lock” promotion, combined with their year-long “Assurance” program, and the newly enacted “Cash for Clunkers” law,

Could serve to push Hyundai even further to the head of the pack:



[From CNN Money, 2/19/09] The auto industry’s U.S. sales in January were at the weakest monthly annualized rate in 27 years,

But Hyundai saw demand rise 14%, a trend [vice president of marketing at Hyundai Motor America Joel] Ewanick,

Ewanick partly credited to the Assurance program, which was launched in early January.



[From CNN Money, 6/30/09] Hyundai will announce its June sales on Wednesday and industry trackers at Edmunds.com expect them to be down 18% from the same month last year,

But that would be much better than the overall industry which is expected to be down 28%.



We wrote this exact conclusion back in February when we first reported on Hyundai’s “Assurance Plus” program,

And we think it still applies: “Automakers take note: if you can prove to consumers that you’re willing to stand behind them, they’ll be more willing to stand behind you.”





Citi Raises Rates Before Rules Take Effect

According to the Financial Times, Citigroup has increased the interest rate on up to 15 million credit card accounts that the bank co-brands with retailers such as Sears.

The increase comes months before the Obama Administration’s credit card reform is scheduled to take hold.



The Credit Cardholders’ Bill of Rights Act, slated to go into effect in early 2010 — pushed up from the originally launch date of July 2010 — is designed to,

Among other things, prevent credit card companies from raising interest rates without the cardholder’s knowledge:



Holders of co-branded cards who failed to pay their balance in full at the end of the month saw their rates rise by an average 24 per cent –

Or nearly 3 percentage points – between January and April, according to a Credit Suisse analysis of data from the consultancy Lightspeed Research.



Citi’s response to the increase was the same as Bank of America’s regarding their recent increases in rates and fees.

 Financial institutions have cited that the cost of doing business has increased due to the voluminous defaults and volatility in the current market:

Mortgage Rates broke news of the hike, Citi issued a statement saying: ”We have adjusted pricing and card terms for some customers as part of our regular account reviews.

 This is an ongoing process to ensure we offer terms, interest rates, credit lines and products based on individual needs and risk profiles.

These changes also reflect the dramatically higher cost of doing business in our industry as we work to preserve the broad availability of credit.”



Citi’s move came as the economic downturn caused record defaults among US card users and prompted many issuers to raise rates,

Both to cushion their losses and pre-empt the new restrictions set to come into effect in February.



However, Citi’s increases have been larger than those of its main rivals, according to Lightspeed, which tracks about 12,000 US credit card accounts.



We expect many credit card companies to rush in many of the practices that will be banned under the legislation while they still can.

We urge consumers to guard themselves against rate increases by buying only what you know you can afford, paying your bill in full and on time every month,

And read your contract so that you understand the terms and conditions of your account.