Citibank Savings Boosts Loan Rate : Banking: The increase in the interest rate it charges on personal credit lines draws fire from consumers because the general trend in rates is downward.

Citibank Federal Savings Bank is boosting the interest rate it charges on personal credit lines, even though overall rates are falling.

The Oakland-based thrift’s move angered customers and renewed criticism that banks are overcharging consumers to recover losses on commercial loans. The thrift’s parent, New York-based Citicorp, reported huge losses on Tuesday, stemming in part from problem loans.

“It looks like they (Citibank) are trying to make additional profits from consumers to offset losses elsewhere,” said Ken McEldowney of San Francisco-based Consumer Action.

But a Citibank Savings spokeswoman said the rate increase had nothing to do with the parent company’s dismal financial performance.

In letters to customers, Citibank Savings said it is boosting the rate on its fixed-rate, unsecured credit line to 18.9% from 17.9%. The thrift said the rate on variable-rate, unsecured lines would climb to 15.5% from 14.5%. “Your . . . account continues to be good value,” the letter said, “even with the new rate.”

Citibank customer Stanley Evans of North Hollywood has a different opinion. “It is absolutely outrageous,” said Evans, who intends to pay down his balance and close his account. “I am not going to borrow one more penny from Citibank.”

Personal credit lines can be used by individuals for a variety of purposes, such as consolidating debt to pay for tuition or doctor bills. They generally carry higher rates than other personal loans because they require no collateral.

Ed Cosroe, director of consumer lending for Citibank Savings, said the unsecured credit lines had been “underpriced relative to their value to the customer and return to the stockholder.” He said it was not a direct result of any increase in loan losses.

Robert Heady of the Bank Rate Monitor in West Palm Beach, Fla., said higher rates on credit lines would discourage consumers from borrowing money and spending it. “It does not bode well for economic recovery, or consumer confidence,” said Heady. Economists say an increase in consumer spending is needed to help the economy climb out of the recession.

It wasn’t clear whether other banks would follow Citibank Savings. A quick survey showed the rates charged by Bank of America and Security Pacific Bank were significantly lower than at Citibank Savings. Both banks charge under 13% for credit lines up to $10,000 and under 10% for lines up to $25,000.

Wells Fargo charges a rate of 19.5% or 18.5%, depending on the term of the loan.