I make it a habit to pay off my credit card balances in full every month. However, due to a recent email mishap, I was three days late on a payment for my Citi Dividend card. I made the minimum payment on time, thanks to my automatic bill pay, but the bill wasn’t paid in full until a few days after.
This month, I noticed a $1.29 finance charge on my bill. I expected a few pennies of interest from the late payment, but over a dollar? So I emailed Citibank. Maybe you can make some sense of the conversation:
how was this charge computed?
05/25/07 05:11:07 PM 1 of 1
You wrote:On my most recent statement I have the charge:
05/14 05/14 00000000 PURCHASES*FINANCE CHARGE*PERIODIC RATE Standard Purch 1.29
Could you explain how this was computed? It seems larger than I expected for being three days late with a payment.
Re: how was this charge computed?
05/25/07 06:55:01 PM 1 of 1
Customer Service Wrote:Paying your balance in full by the payment due date saves you money because it allows you to take advantage of your 20-25 day grace period on purchases. If you wish to take advantage of this period, simply make sure that we receive your full payment by the payment due date.
However, if we do not receive your full payment by the payment due date every month, the finance charges for purchases will begin to accrue from the date the transaction is added to your balance. They will continue to accrue until payment in full is credited to your account. This means that when you make your final payment on these balances, you will pay interest for the time between the date your last statement prints and the date your payment is credited to your account.
Once you have paid your account in full by the payment due date for two consecutive months, you may again be able to take advantage of the 20-25 day grace period.
Thank you for using our website.
RE: how was this charge computed?
05/25/07 07:28:21 PM 1 of 1
You wrote:So to clarify – if I pay my bill on time, but not in full, then on future bills I am charged interest for the time between my statement date and the date my payment is credited to my account?
RE: how was this charge computed?
05/25/07 09:32:05 PM 1 of 1
Customer Service Wrote:We calculate your finance charges in the following manner:
The daily balance for purchases and cash advances is multiplied by the daily periodic rate each day of the billing period, including the statement closing date. The daily balance includes the beginning balance for purchases and cash advances, plus new transactions and finance charges from the previous day, minus any new payments or credits. The balance subject to finance charges equals the total of all daily balances for the billing period, divided by the number of days in the billing period. The finance charge for purchases and cash advances is the balance subject to finance charges, multiplied by the number of days in the billing period and then by the daily periodic rate.
Thank you for using our website.
Seriously, do they pay someone to make this unintelligible? I was inches away from getting a Ph.D. in engineering and I can’t even understand the last message.
I think they’re telling me that if I don’t pay my balance in full, then for the next two months I will be charged interest starting from the day my statement is printed. Even if the payment due date is three weeks after the statement date, I’ll still be charged interest for that time.
To clarify – even though I didn’t miss a payment due date, I will still be charged interest on future purchases, even if I pay them off before the payment due date as well. I’m pissed. Time to look for a new credit card.
Comments on this entry are closed.
Well, you only pay that extra interest for 2 months right? It’s pretty annoying, but only a couple bucks right? I got $39 service charge for a late payment from bank of america once for paying late, which was brutal. Thankfully, I was able to argue that the late payment was the result of automatic bill payment error, and they waived the late fee, since it was the first time I had paid late.
Yep, they’ll screw you up, down, and to the left. Don’t bother switching companies, I think they’re all like that nowadays.
Ok, here is the deal: credit cards are like girlfriends: the longer you have them, the more they cost you.
Get a new card. Every year.
1) I would ask them to show you how this was applied to your specific statement with your specific numbers.
2) I would ask them to show you the language on your agreement where this procedure is described. I would also try to determine if this language is buried within the agreement or otherwise diminished.
3) Assuming this language, etc., is in there and/or buried, I would tell them that you have dedicated far more than the $1.29 in time dedicated in sorting out this debacle and, as a customer service issue, you expect some sort of compensation for your inconvenience. Tell them that you are prepared to switch to a different financial institution and that they have lost you as a customer given their lack of appropriate customer service, including obvious boiler-plate responses to your questions, rather than the simple answer that you requested.
4) If they respond and give you a more difficult time, tell them that you also tell them that you believe that the way they have buried the language (assuming that it appears) is unethical and, perhaps, illegal. Again mention the fact that you intend to cancel your card and are consulting with consumer advocates and/or class action attorneys to determine the appropriateness/legality of this procedure.
Frankly, I think we’re all on the same page here. It’s not about the actual amount $1.29, but the principle of the whole thing.
Finance charges are assessed if the PAYMENT IN FULL is not received by the payment due date. This means that even if you pay ON TIME, unless the FULL amout of the statement balance (not part of it) is posted by the due date, you will be subject to finance charges for TWO consecutive billing cycles based upon your average daily balance. So you are NOT billed finance charges just for the portion you did not pay in full, but they are based upon your AVERAGE daily finance charges (this means your balance for each day of the billing cycle, added together, then divided by the number of days in the billing cycle, times your daily periodic rate). These finance charges will not appear again as long as you make TWO CONSECUTIVE payments IN FULL by the PAYMENT DUE DATE. Standard practice with ANY credit card, not just CITIBANK. This is clearly stated in the card agreement that you signed, problem is that most people either don’t read them, or take the time to understand what the card agreement says. If this is your first time to accrue finances charges, most likely they can be removed as as courtesy just by calling customer service and KINDLY reqesting it. No need to threaten to close your account and go elsewhere, that threat won’t do much good anyway because they are fully aware that these charges are standard credit card charges and going elsewhere won’t keep you from getting them. Be assured there is nothing illegal here or out of the ordinary. If you read every credit card solicitaion you get in the mail, you will see this clearly stated in practically every card agreement out there. The only way to avoid it is not to use credit cards at all, or make sure your PAYMENT IN FULL is posted BY THE PAYMENT DUE DATE.
Hope this helps.
It looks like Citibank is also reading your blog in order to form more meaningful relationships with their customers :P
But anyway, the dividend card is decent, as i always pay it off in full; i’ve gotten over $300 back from it. I’m afraid the girlfriend analogy breaks down there.
However, like girlfriends (:P), I find it a good practice to always have two credit cards at all times — if one’s pissing you off, you can use the other.
Don’t confuse “cost” with “value.” ;)
2 is the hardest number. 1 or 3 (or
more) works much better than 2. ;)
If you have a 20 to 25 day grace period they shouldn’t be adding on any extra charges or interest especially since you made the minimum payment before you paid it off. I would argue with them.
Dear Niels,
I’m not sure what the proper forum is for posting “Ask Niels” questions, but I’ll just post it here in the comments section, in the hopes you’ll read it. In case, we can’t take a class like “art of attraction” in person, are there any materials you recommend reading (either online or books)? I’ve heard “The Game” is good for guys, although I’m wondering what your take is on the book. And are reading books like “The Rules” useful for understanding women as well?
Also, are there different strategies for picking up/getting know different types of girls (shy/quiet, loud/outgoing, sporty, nerdy, bookworm, etc.?)
Thanks for the help (and providing an informative blog).
I’m picturing a conversation with the lovely #@#@$@#wad Gina going something like the one between Jerry Seinfeld and the car-rental lady.
“I KNOW what a due date is.”
“I don’t think you do.”
I do credit card customer service and that explanation makes perfect sense. Its ridiculous that citibank doesn’t allow a grace period after a late payment on your following billing cycle. The bank I work for has a grace period on new purchases regardless. That’s beside the point though. You went past your grace period for repayment on the money you borrowed, and you were assessed interest. It makes sense.
I am having the same problem with Citi credit cards. I usually pay the FULL amount through my online banking, in which I do not even look at the statement. However, for this month, I took a look at my statement and noticed I was charged finance charg. I called customer service and they told me that the finance charge on my statement for this month was for a late payment for 2 MONTHS AGO! I was charged a finance charge for 2 months straight! they said “it takes two statements to clear a finance charge”. WHAT DOES THIS MEAN????? So this means I have to pay over $25 in finance charge for being late 3 days. DOES THIS MAKE SENSE????
I just paid off my CitiCard last month after carrying a $3,000 – $4,000 balance on it for a few years. I paid them the last chunk of nearly $1,400 last month, and now I have a $4.64 PURCHASES*FINANCE CHARGE*PERIODIC RATE due in January. No late payments whatsoever. So is this just some lingering interest that had built up? And why is it due in January and not right now in December? WTF!