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Citibank's dirty tricks with their 0% interest offer

 

comments31 comments. Current rating: 4 stars (8 votes). Leave comments and/ or rate it.

Let me first tell you about the history with Citibank's 0% interest offer.

In October 2004 a friend asked me to apply for a Citibank Platinum Credit Card because she would earn a $100 referral bonus if I got approved. My friend asked more than a dozen of people, of which a few applied, two got approved and she got the $100 for one of these two (for me, to be specific). She and I had to call in several times until they finally acknowledged that I was indeed a referral.

With this card came a 0% interest for one year on balance transfers and on new purchases. I did not really need another credit card at all (had too many already), and I am the type that completely pays the balance every month, thus never paid any interest to a credit card company. However, I also have a few mortgages and a home equity line of credit (HELOC) with rates between 5 and (now) 6.5%. So I decided to pay down my HELOC as aggressively as I could and to make only minimum payments on the credit card. I would do this for 9 months and then use the next 3 months to pay off the card completely so that after the 0% period is over after 12 months, I won't pay any interest to the credit card company. The credit card interest would be higher than the HELOC rate (6.5% now) and is tax deductible on top of that, making it effectively something like 5.5%.

After 9 months I had racked up a balance over $10,000 on my Citicard and paid down my HELOC by $30,000. Not bad. Now I had 3 months left to pay off that 10k balance (which I managed somehow without borrowing from the HELOC again).

All in all I probably saved 6% on an average balance of $6000 = $300 in those 9 months. Not the world but $300 saved is $300 earned.

I was now ready to close this card and called in. They tried to keep me as a customer and offered me another 12 months of no interest on balance transfers. Hmmm.. I liked that!
What about new purchases, I asked? In the first 12 months I had enjoyed 0% both on transfers and on purchases. No, they could not offer that. But they could extend the 12 months to 15 months if I spent at least $300 on that card in the first 3 months. What a dirty trick!!! But I saw through their scheme right away and so my next question was whether any payment will be credited towards the highest interest part of the balance. They said now, any payment is always credited against the lowest balance first.

So let's look at what would happen if I was so stupid to follow their offer:

I make a $10,000 balance transfer to pay my HELOC. No interest for 12 months.
I buy gasoline, flowers, dinners for $300 to extend it to 15 months.
Now I make the minimum payment on the balance of $10,300.. Let's say I pay $400.

That $400 payment will be credited against the $10,000 because that's the low-interest part of the balance.

Next month I will owe $9,600 on the balance transfer and still $300 on purchases plus I will pay something like 7% (not tax deductible) interest on the purchases. I will always pay interest every month because any payment is credited against the balance transfer only after I pay off the $10,000 I can start paying off the pitiful $300 balance.

I asked Citibank's account service lady if there is a possibility to credit the payment against the high-interest purchase part of the total balance and she said NO.

The limit on this card is $15,000. In the same phone conversation I ordered a $15,000 balance transfer to pay down the HELOC. I also cut up the card to make sure that I will never use it for any purchases.

It is a dirty trick to offer 3 more months of no interest to lure people in and practically taking away the whole benefit of the 0% interest offer. When you get a 0% offer, make sure to read the fine print. Is it 0% on purchases and on balance transfers?

Comments:

You are on page 1 of 3, other pages: [1] 2 3
2007-03-07, 09:09:59
anonymous from Becket in Massachusetts, United States  
I didn't see where the writer mentions anything about expecting Citibank to forego any profits from signing on new customers. But, what i did see was a warning to the general population that Citibank may or may not be using deceptive practices with their 0% balance transfers. I believe the writer is warning all to read the fine print. I think it is very helpful for the writer to provide this information regardless if he was able to benefit at the expense of Citibank. That is the cost of using that type of marketing. Good for the writer. Thank you for the info.
2007-03-11, 04:36:59
anonymous from United States  
so you are upset about paying interest on $300 while avoiding interest on $6000? wow
2007-06-03, 20:13:40
anonymous from United States  
rating
you were smart to see their trick, but you should also know that citi is not the only one who is doing it. It is a standard practice in the industry.... so I do not understand your bitter feelings toward citi.
2007-06-11, 21:40:44
janine.fitzpatrick@gmai.com from United States  
FYI - TO ALL - ALL Credit Cards do this same thing - not just citibank - I actually was warned by a Discover Card Rep when I did a balance transfer - He was nice enough to admit that they too would do the same if I charged a new purchase after taking advantage of the zero % or low interest transfer - He suggested leaving the card at home in a safe place....until the balance was paid....all that have read this can now pass this information along to friends and family - be safe and read or ask about the fine print!
2007-08-06, 18:04:20
anonymous  
rating
The simple way to avoid this problem is open a second credit card account. For every bank where I have a balance transfer card I have a second account that I use normally for purchases.

Recently, too many people have been making money on these 0% balance transfer offers so most of the banks now are requiring a 3% transaction fee. It used to be that those were waived or capped at $75 but no longer.

I have very much enjoyed these promotions while they lasted.
2008-01-10, 16:43:59   (updated: 2008-01-10, 16:45:59)
anonymous  
rating
You're stupid.
2008-01-11, 12:07:54
anonymous from Netherlands  
Be aware that a bank is just a transportcompany for money...there own capital is less than 2 % 98 percent is money of their costumers and shareholders.The board of each bank is a bunch of robberies..They steal money from the costumer is huge amounts.
Beware and cash your money before EVERY bank is going into a bankrupcy,
2008-01-23, 14:40:32
anonymous from United States  
What do you mean by 'dirty trick'? You clearly understood the original terms they offered you, and got a great deal with the 0% financing. Once the period was over the deal was over. Finished. They then extended you a new offer. It's your decision whether to use it or not. No one could force you to accept their new deal.

It's called capitalism. Do you really believe Citibank is in business to give you free use of their money forever???

Caveat Emptor
2008-02-19, 13:02:26   (updated: 2008-02-19, 13:05:53)
anonymous from United States  
some of you don't understand the complaint.

The consumer believes that their payment will at least be proportional to the balances.
So, some of the payment will go towrds paying down the higher intererst loan.

I actually had a rep tell me it would be proportional, obviously, she was wrong. No big deal. I trasferred to another card, which had no other balance and kept it clean - thus paying effctively 4.99% for life of loan, or whatver it was at the time.

keep a FICO north of 750 and don't combine transfers with purchses on the same card and it's simple. We have a car loan at life time of 3.99% now, after paying 3%, max of $199 on a 14k transfer. We had a loan at near Prime from the car dealer; but 3.99% is much better than 7.29%, when that loan will be with me for a few yrs (even though we paid $199 to transfer)

My own Citi Bank specific complaint though, comes from another incident. It was circa 2000. And I had a few thousand on CitiBank, paying 8.99%. I just called and asked 'Hey, I'm considering other offers, do you have a better rate for me?' After a bit she says 'Ok, we can lower your rate to 6.49% for 9 months' Ok, sure, sounds good. I figure I'll take that and see what comes up. I tend to be loyal and not switch (at least back then) for a small amount.
Well after 9 months my rate shot up to 17.98%! The manager told me that I had an introductory offer and the rates revert back to the 'standard rate' - which apparently <> my 8.99%. This of course was not communicated over the phone. After a bit of huffing and puffing and trying to reach this manager - who never returned a call. I took the money elsewhere. Not that Citi misses my money; but I find it arrogant how they think someone would still do business with them, given all the options out there. Free Market is a beautiful thing.

2008-05-04, 08:18:00
anonymous from United States  
rating
I've used these same offers from Citi and other companies for years. All you have to do is, make the $300 purchase in the first 90 days to extend the 0% to 15 months (or what ever the terms are), pay it off, THEN take out your balance transfer for 0%. Now you won't have any interest charging balance underneath your balance transfer. Easy as pie and you don't get charged a penny. Keep in mind the 'balance transfer' can also be made in your name (they will send you a check) and you can just plug the $ into a 9 month CD and earn interest. You need not have any debt to take advantage of this. I've done this for years and have never paid a penny. It makes up for .00001% of the people they rake over the coals with 30% interest rates so I don't feel bad. Anyone who does this is easily in the small minority so don't waste time feeling sorry for the credit card company. There's nothing in the agreement that says you need to invent a way to let them make money off of you. They gamble that you are too stupid to figure out how to work the transfers and funny enough, most people are. That's why they stay in business.
I used 0% to climb my way out of all my debt (student loans, car). Now I use them to earn interest. Worked like a charm.
2008-09-11, 05:41:06
anonymous from United States  
rating
Here is my complaint, my card offered 0% on purchases until 7/08 and 0% in balance transfers until 1/09. I knew not to make purchases on a card that I had done a 0% transfer on because most bacnks apply payments to the lower (0%) transfer first, but this had 0% on purchases also. But once 7/08 passed I started getting charges on the purchases too, with no way to pay off the purchases until the balance transfer was paid off in 1/09. So the 0% on purchases was actuall no finance charge until 7/08 not 0% on purchases - i.e. no way to ever truly have 0% on purchases because you cannot pay off those purchases if you are trying to take advantage of the 0% balance transfer through 1/09.

Now about the bank not making any money for 'lending' you money. They are counting on you not paying off the transfer at the end of the 0% period. Then they will make huge (almosut usary) profits on your huge 0% transfer!!!
2008-09-11, 05:41:17
anonymous from United States  
rating
Here is my complaint, my card offered 0% on purchases until 7/08 and 0% in balance transfers until 1/09. I knew not to make purchases on a card that I had done a 0% transfer on because most bacnks apply payments to the lower (0%) transfer first, but this had 0% on purchases also. But once 7/08 passed I started getting charges on the purchases too, with no way to pay off the purchases until the balance transfer was paid off in 1/09. So the 0% on purchases was actuall no finance charge until 7/08 not 0% on purchases - i.e. no way to ever truly have 0% on purchases because you cannot pay off those purchases if you are trying to take advantage of the 0% balance transfer through 1/09.

Now about the bank not making any money for 'lending' you money. They are counting on you not paying off the transfer at the end of the 0% period. Then they will make huge (almosut usary) profits on your huge 0% transfer!!!
2010-02-26, 21:48:55
anonymous from United States  
F@*K CITIBANK. 6 years of not missing a payment and paying on time and they DOUBLE my interest rate. I call to OPT out and keep my 7.9% interest rate and they say 'you are a great customer' and we will EXTEND your 7.9 % interest rate for another 9 months. Well, 9 months came and went and then they wanted to put my rate at 14.99%. I called to OPT out again and they told me that the 7.9% was an introductory rate. I told them that I have had a 7.9% for 6 years and they told me 'no', you have only had a 7.9% for 9 months because when we extended the rate 9 months ago, that made it an 'introductory rate'. That is DECEPTIVE!! I tried to OPT out previously and they DECEPTIVELY lured me into accepting 9 more months. SEE YOU IN COURT BASTARDS!!
2010-02-27, 07:57:14
OJAS from United States  
Some banks direct your 800 numbers to foreign countries, for example, New Delhi, India. It is scary to think someone overseas knows your Social Security, and if they do something wrong, they are beyond the reach of American laws.

When talking to overseas call centers, be careful !!
2012-08-03, 06:41:52
anonymous  
Yep, always remember they're in it to make money, not give you something for free- stupid yank
You are on page 1 of 3, other pages: [1] 2 3

 

 

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