Citibank Charges Undue Interest…
During my annual review of every finite detail of all my accounts (banking, credit, and retirement included), I found something I thought odd — I had a balance on my business Citibank card account, even though I expected to see a zero balance.
The entire balance from the July 18 statement was paid in full, received, and credited on August 8. The due date for that statement had been August 12. The payment was therefore received on time. I didn’t receive a late payment (as I obviously should not have), but I was charged an additional $43.31 in interest charges.
Huh?! Why?
The common sense rule that everyone knows is that when a balance is fully paid, there is nothing else due. That’s what “paid in full” means. No more interest is charged. No additional fees. So, why was I charged $43.31 in interest charges?
Enter a Citibank customer service representative, stage left. The explanation from which he refused to veer was that the charge was “residual interest”. He claimed that it was interest “left over” from the June statement.
Citibank very clearly states on the back of each statement that if they “receive payment of the total new balance, if any, listed on the last billing statement… in time to be credit as of the payment due date shown on that statement, you have until 1:00 pm local time on the payment due date shown on the statement… for us to receive… your new balance to avoid imposition of additional finance charges for purchases.” OK, it’s not written in third-grade-level English, but it’s still clear that I should not have been charged additional interest, despite the contents of any pre-stated terms and conditions.
The original terms and conditions may define and enforce residual interest, but if they send written correspondence that refutes the additional interest (like the one above), you owe nothing. I couldn’t get the Citibank rep to change their position on the concept of “residual interest”, despite having recited to him the above-quoted Citibank policy, but I did get him to remove the charge entirely.
It makes me wonder how many people there are in the world that do NOT check every line item on every financial account to find cases like this where the company is clearly trying to take advantage of inattentive customers. How many millions of dollars are made by big corporations from false claims and “innocent” pretenses?
Kinda scary, isn’t it?
I paid off my balance on my CitBank credit card. Four days later, I was surprised by a “residual finance charge” appearing on the card.
I called customer service, they tried to explain/justify the charge, none of which I cared to hear. They offered no resistance to moving the charge.
The next day, when my balance was zero, I closed the account. I was passed to a last-ditch “Account Closing Specialist.” He asked me to explain why I was closing my account. I challenged him to tell me if he could actually do anything, or if he was just going to use what I say to argue with me. He told me the former, and did the latter. He also revealed himself to be an arrogant jerk in the process, with “14 years in the industry.”
Apparently fourteen years didn’t teach him or CitiBank any ethics. Goodbye CitiBank.
I work for Citibank and let me tell you are in fact wrong. Did you by any chance read your terms and conditions of your credit card, I would say that you didn’t. Any time that you don’t pay your account off in full you will get a finance charge. Since your statements run a month behind, your charged a month behind in interest. We don’t charge you upfront for interest. So I would bet that the month that you did PAY IN FULL, you didn’t pay in full the month prior to that statement. Please read your statement and your terms and conditions before you bìtçh and complain about something that you know nothing about. Thanks.
@Pam: Well, that’s exactly the problem. If I paid in full, by definition I don’t owe any more money, so paying in full two months in a row does not make sense. From the financial perspective, I do understand the concept of “residual interest”, but as a consumer, it’s not very fair and it’s deceptive.
If I loan you $20 today, next month you’ll owe me $21. If I send you a letter that states “if you pay off the $21 balance in full before the end of next month, I won’t charge you any more interest”, and you then pay the $21 on time, wouldn’t you just tell me to go jump in a lake if I came back and said, “Sorry, you owe me another 50 cents for residual interest”? Even if I had told you in writing beforehand, it still wouldn’t be fair to charge the extra interest because I had changed the terms in writing. Or have you drunk too much Citibank Kool-Aid to notice?
The terms and conditions are part of the contract between the consumer and the finance company. Sending a letter with updated terms (“you have until 1:00 pm local time on the payment due date shown on the statement or us to receive your new balance to avoid imposition of additional finance charges for purchases.”) is a modification of the agreement.
Citibank breached the new agreement, one they instigated.