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 frankly think that Blue Cross/Blue Shield has a handbook about Consumer Psychology that they have shared with every corporation that charges customers for expenses affiliated with “line items”. 1) They count on most people paying the amount because they a) don’t have time to notice it or b) don’t have time to correct it. 2) Most people are not assertive enough to argue with the Nim Rod’s of the world. It’s not their fault - they just work there - but they must assert aggressively a claim to the inaccurate charges. 3) I’ve even thought hashing algorithms come into play - at the very least statistics. On 2.5 million customers, an overcharge of $43 is some profit for the corporations on Wall Street. Even if only 10% let it ride - hey that’s enough for a promotion! 4) What is the consumer going to do? This goes along with the axim - “fight your battles carefully”. So, an average working Joe only has so many hours to battle so many demons. If every corporation is charge us additional amounts, we can’t get the politicians to do anything (they may be encouraging them with some of the antitrust laws they are breaking these days) - how many of our monthly bills do we have time to call and fight? It’s amazing. Last month, I sat down and saved myself over 1,000 dollars. My AT&T Wireless service was unavailable because of some network glitch - so the solution was to transfer my calls to my home line @ $20 per month above the $49 a month for my regular calls (which, hello, I couldn’t utilize). Having had surgery - I knew I hadn’t utilized the calls anyway - yet, they can’t tell you all those minutes you are charged for - exactly where they are coming from. Maybe AT&T hires illegals to call for pennies while charge me dollars? Then, my mortgage company had allowed me to pay my taxes and didn’t bother to pick it up in their accounting until I called about the increase in my mortgage escrow account. Apparently they were on the ball enough to note that I needed to pay more to pay my taxes. Even though the law says I only need two months of escrow - I paid 1/2 year in taxes - while they held the money in my acct. & charged me for escrow shortage! It’s enough to boycott society. I can remember when Ma Bell was the only phone company and your phone charge was $12 a month. I now pay $50 for a cell (more when I don’t bug them), $50 for home line, additional for internet, DSL… So - now that everyone has home offices - try deducting the expense? Think twice. If you deduct a home - it eliminates your ability to claim the $250k per person tax gift from Uncle Same. Yup - you would have to claim the portion of your home office as income. There is no winning. If anyone has hope - please share. Needing hope. V
I am commetning on the Citibank strikes back statement. Interest accrues daily. Therefore, the balance from your statement is as of Jluy 18th. From July 19th until the day they made the credit to your account (August 8th), interest accrues on your outstanding principal balance. That 43.31 is most likely interest that accrued on your account. Whenever paying off something like a credit card, you should call them up and ask for a 10 day payoff balance. This way they will give you the amount due in 10 days from, including any accured interest.
Missing the point entirely that interest is not accrued if the total balance owed is received before the due date per their own written policies… - RDL
I know this topic is two years old, but I’m currently fighting a battle with Citibank and stumbled upon it from a Google search. My current problem echoes the comment from Valerie G on 1-20-04 and I have to say it doesn’t miss your original point — it IS your original point. Citi is making the same claim with me that interest accrues from the date the statement is printed, regardless of the due date. I am arguing on the same grounds you original argued — payment of the total balance before the due date is not supposed to accrue any interest. Unfortunately, Citi has absolutely NO respect for its customers and has found a deceptive loophole to bill finance charges from day 1.
I ran into the same problem 3 times. But the agent I spoke to credited my account for the interest charged. It seems like a fraud practice. Citi will charge the interest even if you made full payment before due date. If you notice it and call them up, lucky ones get it back. And others don’t…Maybe there is some lawyer out there reading these comments who can initiate a lawsuit against Citibank.
Well I would never think I would take the side of a shady financial institution, especially Citibank, who in my own personal experience is least consumer friendly out of the bunch of ‘em, but… “joe from two years ago” does seem to be correct. And I’ll bet this never happens as an unexpected charge if your bills were always paid in full and in time. It sounds like you did not pay a previous month’s bill in full, they added interest, and then you paid that amount in full in time for the next due date. Now you think you’re done. Citibank (and all the rest) don’t think so! That interest will continue to have accrued between the time they sent you the bill (even though it looked like they were telling you the full amount due) and the time it is paid. Then they add that to the next cycle. So I guess the only way to not get charged more the next cycle, is to call them and ask how much it will be on a specific date that you can have the payment to them and posted by. You ARE NOT paying it in full in time as soon as you breach that one month, interest is not part of this month’s balance (as you believe from the terms statement). They will usually remove it if you call, because most consumer’s find it deceptive and offensive, and I AGREE, but it is legal and actually a correct application of finance charges.
Hope I didn’t offend your common sense!
Nope, didn’t offend me at all. My complaint is about the “principal” of the whole thing.
Rich,
Just had the same argument and problem with CITI, had to talk with a supervisor to clear it up. Did they ever try to report the extra interest to any credit report companies?
Got a credit invoice from Citi stating I had a $20 credit balance even though we had not used the card in years. Next month got the same $20 credit statement so I got out the card and charge $50 to it. Next month got a bill for $55, sent a check asking where my $20 credit went; no reply and next month got a bill for $71.30; next month one for $17.15 and so on.
Do not deal with Citi cards!!!!!!!!!!!
@AMF: No, they didn’t. As I stated above, they ended up removing the charge entirely.