Credit Card Interest Rate Hike
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Post subject: CITIBANK GOLD MASTERCARD
JOSEPH
Date: 2/12/2001 12:52 am CDT
I JUST RECEIVED A REVISION NOTICE TO MY ACCOUNT AGREEMENT
WITH MY CITIBANK GOLD MASTERCARD. UNDER THE ITEMS LISTED
FOR WHICH THE ACCOUNT WILL BE CONSIDERED IN DEFAULT WAS A PROVISION WHERE IF A PAYMENT IS MADE LATE TO THIS ACCOUNT OR ANY OTHER CREDITORS ACCOUNT, THEN THE ACCOUNT WILL BE IN DEFAULT.
I CAN UNDERSTAND IF A PAYMENT WERE MADE LATE TO THEM THE ACCOUNT WOULD BE IN DEFAULT, BUT A LATE PAYMENT TO ANOTHER COMPANY? I CAN SEE HOW PAYMENT HISTORY IS AN IMPORTANT ELEMENT OF ONES CREDIT PROFILE, AND CAN BE USED TO SET INTEREST RATES AND SO FORTH, BUT TO ESTABLISH A DEFAULT OF AN ACCOUNT AGREEMENT DOES NOT SEEM RIGHT. IS THAT LEGAL? IF IT IS, I DON'T THINK IT SHOULD BE. TO ME IT'S LIKE HAVING YOUR HOUSE REPOSSESSED BECAUSE YOU MISSED A PAYMENT ON YOUR CAR.
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dave
Date: 2/12/2001 3:56 pm CDT
Yes, it is legal. Citibank reserves the right to increase your APR if you are late with other lenders. This is a sensible provision because from Citibank's perspective, you would be a higher risk to them. It's unfortunate that they use the word "default" to describe this situation, but the plain meaning is that if you fail to maintain good credit in general, you will have to pay higher interest.
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Eugene
Date: 2/12/2001 11:02 pm CDT
Citibank reserves the right to increase your APR if you are late with other lenders. This is a sensible provision because from Citibank's perspective, you would be a higher risk to them.
Exactly.
It's unfortunate that they use the word "default" to describe this situation
More importantly, what does defaulting lead to with them? They will certainly raise the APR, on reward cards defaulting leads to forfeiting the pending reward, you can also forget most other perks because they are offered only for accounts in good standing (is that the exact opposite of default?) What else will happen? Joseph, you should scan your card agreement for the answer.
, but the plain meaning is that if you fail to maintain good credit in general, you will have to pay higher interest.
Well, up to now Citibank had a procedure to do that without needing to re-define "default". If they do now, they most probably do it for reasons other than being able to jack up your APR if you pay late to other creditors.
Has anybody else received a notice like that from Citibank? I have not.
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: Amy
Date: 2/13/2001 4:04 pm CDT
HI I had a late charge with Quicken card with Citibank ( the first EVER- I think they are shortening the grace time for profit!!
I had a balance at Christmas-mailed in full (as always) on 12/20 and was charged late charges till 1/6 -They would not adjust for Christmas mail and days closed. Since then I have noticed I get the bill with last day of the month charges but don't get it till the 12th- or 15th of the month with due date of the 26th. Are there cards with better grace periods- I bearly have time for a same day turn around on the bills!
Thanks Amy
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Mom
Date: 2/13/2001 9:08 pm CDT
How you considered using the online payment feature with Citibank, I also didn't like getting bills so close to the due date but now I pay online as I do with all my accounts, that way I know they get paid in plenty of time.
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Eugene
Date: 2/13/2001 10:11 pm CDT
How you considered using the online payment feature with Citibank
or at least viewing your bill online (sooner than you can ever get the bill in the mail) if you feel uncomfortable paying online.
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Ira Stoller
Date: 2/13/2001 11:29 pm CDT
Unfortnately the so-called "25 day grace period" is a work of fiction. It's 25 days from the date that your statement is PREPARED, not from the date it is mailed. This is an important distinction. It's more difficult to determine now than it used to be. Formerly all envelopes were postmarked and you could compare the date of the statement with the date on the postmark. These days everything is mailed with first class permits and the envelopes are virtually never postmarked. However, I used to find up to a five day descrepancy between the two dates. I used to call and complain about this. Once in a while they would extend the grace period for another five days to compensate. However, for the most part the banks these days have us by the you-know-whats and our only choice is to pay it now (no finance charge), or pay it later (finance charge, late fee, etc.) A few enterprising TV consumer reporters will publicize this once in a while, but th problem never goes away.
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Eugene
Date: 2/14/2001 3:34 am CDT
Unfortnately the so-called "25 day grace period" is a work of fiction. It's 25 days from the date that your statement is PREPARED, not from the date it is mailed. This is an important distinction. It's more difficult to determine now than it used to be.
Actually, it's pretty simple. Maybe different from what it used to be but still simple. Grace period is the minimum guaranteed amount of days during which you could borrow the issuer's money for free (without incurring finance charges). That means the number of days between the statement date and the due date, as Ira said.
Now comes the more difficult part - figuring out how big a chunk of that time will be eaten by the issuer (before they actually mail the statement) and by the USPS.
Bad news: it's not just difficult, it's impossible to know when your next statement is going to come. Neither the issuers, nor the USPS guarantee anything after the statement date.
Good news: you still have the grace period as I defined it above. If your checking account pays you interest (or if you transfer funds from your MMA as late as possible), the money has a chance to work for you. Just let it do that.
Bad news: one late payment can cost you more in the long run than many months worth of interest saved on float. So, play this game safely. (Many online banks guarantee timely delivery of your payment, though.)
Good news: printing statements is part of creditors' mass production process, and they seem to be pretty consistent in how fast they do that. If getting statements early is an issue for you, I suggest asking around on the web how early other customers get the issuer's statements, before you apply.
Bad news: the issuer will not always waive the late fee, even if you call and ask, even you know they consistently mail the statements late, even if you were never late before. Most will, but they do not have to.
Good news (the best): you can minimize or eliminate the effect of this on you in several ways. If you read this post now, you most probably can do that. View your statement online, have the issuer automatically email you whenever it is available, use online bill pay, or let the issuer debit your checking account directly. All of these things are convenient, work faster than traditional ways, consume less time, save money, are private and reliable 99% of the time (the rest 1% of cases are rather easy to spot). Their only big disadvantage is that they contradict human nature to adopt new things. It's even bigger than not having access to a computer and the Internet, I think.
If you are not ready for Internet in your personal finance yet, or are hesitant to give you bank account info to the creditors (it's safer than you might think, actually), the only option I see is tracking the expected statement arrival date and raising a big smoke while there's still time to mail the payment on time. To me, it doesn't sound like even a half-measure, more like a quarter-measure to solve the problem.
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Ira Stoller
Date: 2/14/2001 11:02 am CDT
Two problems with your post:
1) It assumes that your statement is ALWAYS 100% correct and that you are willing to pay the amount the bank says you owe. This is not always the case, at least not with me. I frequently receive renewal charges from services that I cancelled a year back, duplicate charges from merchants, charges that I need to investigate, etc. I would no more trust a credit card statement, sight unseen, that I would trust my checking account statement to be in sync with my records. In both cases I need t0 reconcile the statements before just filing them or making any payment. Such being the case, how can I authorize the bank to automatically debit my checkiing account? That's sorta like shoot first and ask questions later. I'm a bit more careful with MY money than that.
2) If you do authorize your bank to automatically debit your account to pay your credit card, what amount will they debit? The minimum payment? The entire balance? When will they debit your account? What if you don't have the funds in the account on that date to cover the debit? Will you receive advance notification of the amount to be debited?
If you say that my distrust and cautions are showing...you're right!
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Eugene
Date: 2/14/2001 11:35 pm CDT
I would no more trust a credit card statement, sight unseen, that I would trust my checking account statement to be in sync with my records.
Automatic payment works like this: you would get the statement and the grace period, exactly like you do now. The only difference is that the statement will say something like: "Do not pay this amount. $123.45 will be withdrawn from your bank account number 1234567 on mm/dd/yy automatically."
You check all the charges, of course. If everything is OK, you don't do anything, just let the money sit on your account until the due date (it is the due date when they debit your account). If you have a problem with the amount of the bill, or even if you don't, you can call the creditor some days before the debit date (at least 3 business days in case of Citibank, for example) and change the amount debited or cancel the debit with no questions asked. If you want to dispute a charge, tell them that, they will reduce the debited amount by the disputed amount, temporarily credit your account by this amount, and you both do the rest of the dispute procedure like you normally would.
With credit card companies, you have a choice of debiting the minimum amount due, the full balance, or the amount you specify. With utility bills, I think your only choice is the full amount due (which makes sense).
It takes pretty long time (usually more than a month) to activate automatic payment because the credit card or the utility company has to notify your bank with the proof that you want this thing set up.
Later, it is easier (at least with Citibank) to change the amount of automatic debit. For example, when I play promo APR game, I set it up on "Minimum payment due" (of course). Next day after the due date of the statement after which the promo APR expires I go to their site and change that to "Full balance". Next statement I get (the one that is printed after only several days after I did this change) already reflects the change and the next due date the full amount due is debited. You maximize your float (hence interest) like this. Nothing gives you so much bang for the creditor's buck, so much convenience and so much peace of mind - not online banking, not mailing the check three days before the due date, nothing!
If you do not have the funds to cover for that automatic debit, it's exactly like bouncing a check. You owe your bank an NSF fee, and your payment is not received on time, with all the sad consequences.
If you say that my distrust and cautions are showing...you're right!
I think that's how a lot of people feel about this. I would also never let anybody to debit my bank account without me knowing well in advance and being able to dispute or cancel the debit alltogether. Automatic debiting does allow me to do this, so I am totally happy with this service.
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Linda in VA
Date: 2/14/2001 11:38 pm CDT
I have to vote with you Ira. A couple of my cards with online payment will allow me to set up regularly scheduled automatic debits - I don't do it. Sometimes I set up one payment in advance, but authorize a ongoing debit? - nah, don't think so.
As most of you know, I'm an agent - I've had to deal with the nightmare of having a company continute to debit an account when the account holder has requested it to stop. I've lost some good policyholders because of this type of situation. And heaven help you if the account is sold. They never seeem to be able to convert from one system to another without serious problems.
Regards,
Linda
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Eugene
Date: 2/15/2001 0:31 am CDT
I've had to deal with the nightmare of having a company continute to debit an account when the account holder has requested it to stop.
I knew I would forget something in my post.
You can tell the bank (your checking account bank) to not allow any more automatic debits from a particular CC or utility company. After that even if the company tries to pull the money out, the bank will not allow it to happen.
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Kathy
Date: 3/10/2001 4:48 am CDT
dave correct me if i am wrong, but dont you go by the agreement you signed. as i signed an agreement with citi over ten years ago..that may be legal now but sure wasnt back then when i signed it. and who is citi to change the rules in mid stream, with giving you an opportunity to withdraw.seems to me they are paying out millions right now for being caught overcharging..that tells you something
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Kathy
Date: 2/21/2001 5:23 pm CDT
it is my understanding, and common sense that the original agreement should prevail. I have had citibank for over 10 years and never missed a payment or late with them.. but because i had a disputed charge with another company, they raise my interest rate, in fact doubled.. I will not pay rhem and take my chances in court, when the time comes... I suggest very one else do the same.. they are getting away with unfair practice.. ask to see the signed agreement, forget what they might have mailed you after you had the card.. American airlines advantage program in conjunction with citibank, got stopped dead in ther tracks when they tried tp raise the miles needed for a free flight after you signed up and received the card based on 25,000 miles.. this was stopprd by the court, and i feel confidence this will to
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gina
Date: 3/2/2001 9:38 pm CDT
This default issue came up with me also and I am now fighting it as there were no basis for it. The other part of this thievery is that they also want to raise the interest rate to higher than I have ever known one to be - that of 24 percent. This extreme seems a illegal. I will never do business with Citibank again !! Are you also penalized if you pay off the entire balance in one shot ?
gina
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Kathy
Date: 3/10/2001 4:39 am CDT
Dear Gina, keep in mind that citi recently lost a class action suit whereas, they have to repay, millions of dollars, in illegal charges..people are now signing papers for the refund. what happened to you also happened to me , as it is posted near your posting..I am currently awaiting a reply from our attorneys who are looking into this..I have sent citi a certified letter objecting to this, and they have put it off for 4 months..they say this is computor generated and they cant stop it..Bull good luck Kathy
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Kathy
Date: 3/10/2001 4:40 am CDT
Dear Gina, keep in mind that citi recently lost a class action suit whereas, they have to repay, millions of dollars, in illegal charges..people are now signing papers for the refund. what happened to you also happened to me , as it is posted near your posting..I am currently awaiting a reply from our attorneys who are looking into this..I have sent citi a certified letter objecting to this, and they have put it off for 4 months..they say this is computor generated and they cant stop it..Bull good luck Kathy
gina wrote:
-------------------------------
This default issue came up with me also and I am now fighting it as there were no basis for it. The other part of this thievery is that they also want to raise the interest rate to higher than I have ever known one to be - that of 24 percent. This extreme seems a illegal. I will never do business with Citibank again !! Are you also penalized if you pay off the entire balance in one shot ?
gina
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posted by CardRatings.com at 9:40 AM
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