A payment by any other name, stinks

cube1067June 16, 2004

At least, by Citibank standards, it does.

CitiVisa balance was $38.85, minimum amount due was $20, payment due date was 6/1/04.

Returned an item; my VISA card was credited $24.00 on 5/27/04.

Received new VISA statement on 6/15/04. Was charged $15 late fee on my outstanding balance of $14.85. PLUS finance charges.

IÂve called and got the late charge waived, but IÂm pissed that I have a 30-day-late flag on my credit report. IÂve worked hard to keep a clean credit record. IÂve also blown my personal goal to never pay CC finance charges. (reformed CC junkie here)

Customer service clerk also told me that my next payment must be for the full balance of $30.05. ("Be sure not to deduct the $15 from your payment. WeÂll credit your account".) She also told me a "credit" is not a "payment".

I could argue semantics, because the statement says "minimum amount due" NOT "minimum payment due", and my store credit of $24 is an amount.


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Cancel the card. Take that, citibank !!!

    Bookmark   June 17, 2004 at 9:11AM
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Agreed, cancel the card.

It's insane that they don't consider a return credit part of the payment. The money is back, who gives what the source is.

Are you a member of a credit union? If so, check out their card options. Often MUCH better all around, especially service, than the megamonsters.

    Bookmark   June 17, 2004 at 10:23AM
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Funny, but I would never have thought a CC company would consder a return credit a payment. It's well known that these outfits take every advantage they can, so you can assume they're never going to interpret anything in your favor.

It's always a good idea to ask ahead of time.

    Bookmark   June 17, 2004 at 2:35PM
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I'm w/ Maxwell--I would never have assumed that the department that credits your account w/ a return is the same department that's waiting for a cash payment.

I would have asked before I'd counted on it.

    Bookmark   June 21, 2004 at 1:49PM
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Oh...and depending on your credit situation, you may NOT want to cancel that card.

Length of account age is a major factor in your overallcredit scoring.

You can only apply/receive/cancel cards without negative impact if you have a few "base" cards that have large limits, no balance ON those limits, that you have had for 5+ years.

Just thought I'd throw that out there.

Also, are you sure the 30 day late actually hit your report? Many credit card agencies don't report such small overages....some are quite diligent. You'll need to check your report to see.

Hope this helps.


    Bookmark   June 21, 2004 at 8:39PM
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Thanks, I will be checking my credit report. I'm pretty good, FICO-wise. No plans to close the account. I thought my record was good enough to give me some allowances. My balance was so low I thought they'd let the credit hit the account and adjust the next bill by asking for the balance as the total amount due. Even their reconciliation floors me. They'd rather credit my account and then, a few weeks later, send me a check for the amount they owe me!

    Bookmark   June 27, 2004 at 6:12PM
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Echoing what some others have said, it would never had entered my mind that a credit would count as a payment. By the way, are you really sure they dinged your credit report after 30 days? I'd be surprised if they would do this for a first-time event.

    Bookmark   June 30, 2004 at 5:36PM
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Oh, I see you were going to check your report--sorry, I missed that!

    Bookmark   June 30, 2004 at 5:40PM
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Of course a credit is not the same as a payment. Whether or not you returned something you had purchased does not take away your responsibility to make a monthly payment. If it did then one could conceivably never make a payment at all. All that you would have to do is buy something that costs the same or more as your minimum payment and then return it each month.

    Bookmark   July 8, 2004 at 5:35PM
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I think the main reason they require a minimum payment every month is so that they have an opportunity to hit you with a big late charge if it gets there a day late.

Most quality credit card issuers such as USAA will not require a minimum monthly payment as long as you made enough of a payment the previous month (or sometimes even in the previous 3 or 4 months) to cover all of the minimums that would have accrued.

This is a far more consumer-friendly system because it frees you from worry about a late charge, assuming you usually pay more than the minimum. And if you're going to let the balance ride until the next month, there's no need to waste a stamp and write a check to pay some small amount like $20.

No need to cancel the Citibank card. Just cut it up or secure it somewhere in your house, but leave the account open. Then get a card from a better credit card issuer to actually use. If you have good credit, you don't have to mess with that "minimum monthly payment" and late charge nonsense at all, unless you just enjoy it.

    Bookmark   July 11, 2004 at 1:23PM
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Most quality credit card issuers such as USAA will not require a minimum monthly payment as long as you made enough of a payment the previous month (or sometimes even in the previous 3 or 4 months) to cover all of the minimums that would have accrued.

I have NEVER heard of this.

I agree it's far more consumer friendly. But credit-card companies are out to make money.

who is the USAA?

    Bookmark   July 13, 2004 at 5:35PM
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Of course they're out to make money. I'm sure USAA still makes plenty of it through interest on unpaid balances and fees charged to merchants. USAA is USAA Federal Savings Bank, based on San Antonio, TX, and they are not the only credit card issuer that does this. Their APR is 12.5 percent and there's no annual fee.

It pays to shop around for credit just like you shop for anything else. The big credit card issuers like Providian, Citibank, and Capital One are NOT the best, yet many consumers continue to take the mediocre credit card deals they offer without shopping for better ones.

    Bookmark   July 14, 2004 at 2:33AM
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I have a credit card, I think it MBNA, that doesn't require a payment if I pay a lot the previous month. I make a payment every month anyway, but it's nice to know I don't need to. I avoid using my Citibank card because they charge 4% MORE than my other card. I have asked them to lower the interest, and they do, but then it somehow creeps back up.

    Bookmark   July 14, 2004 at 11:30AM
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That's just it. There are good deals out there, but they don't come from the credit card companies that come looking for you with the misleading and flashy offers of 0.0 percent interest for a limited time -- they come from the institutions you have to seek out yourself.

Along with most other businesses dealing with the public, banks decided a few years back to become lean, mean, and a lot more hostile toward consumers. That's when they started in with the late charges assessed if the payment is even one day late. In some cases they have even been known to delay processing of payments so customers would be hit with big late charges. Obviously that's not legal, but it's been done, and probably is still being done by institutions that have not yet been discovered. Cash advance fees and finance charges (over and above normal interest) are another example, and "over-limit" fees are yet another. (If the transaction puts you over your limit, why did they approve it?)

Consumers accept these things even though they don't have to do so. You have to spend some time reading the fine print in various companies' agreements, but you can indeed find many credit card issuers that do not require minimum payments under circumstances described above, do not charge cash advance fees, do not charge over-limit fees, and do not secretly raise and lower acountholders' interest rates or selectively apply different account terms.

    Bookmark   July 14, 2004 at 2:42PM
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If you choose to stop using/cut up your card ...

... be sure to call them to tell them that is what you're doing - and the reason. Be reasonabled and courteous. Business-like.

If they get no complaints, they're not likely to alter their policies.

Maybe not alter them anyway - but they may, if they figure that it's losing them enough business.

ole joyful

    Bookmark   July 20, 2004 at 5:26PM
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Very true. Plus, if you have a talk with them, they'll often change your account terms, even if they don't change everyone else's.

    Bookmark   July 22, 2004 at 11:42PM
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More and more people are paying their balances every month, meaning that the CC comapanies aren't making as much money on interest. To make up for it, they've increased their late fees and other charges tremendously. Apparently, about half their profits now come from fees. And more people are paying late fees because the CC companies have shortened the periord for timely payment. Some even deliberately don't process payments for several days after the payments are received so that they can claim that they're late.

This is an industry begging for reform.

    Bookmark   July 27, 2004 at 3:19PM
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Very true.

Here's what just happened to me:

I got a Sam's Club card with the credit feature and used it to make a couple of purchases. As is often the case, the credit feature is actually run by an outside financial institution (Monogram Credit Card Bank of Georgia, in this case.) When the card was issued, my address was apparently keyed in incorrectly, and the statement arrived at my house 2 days after it was due. Called in and found out a $25 late charge had already been assessed. Talked to a polite representative who claimed she "couldn't find" the late fee on my account. Odd since it was obviously there, as my balance was being reported by their automated system as being $25 higher than the total of my charges. Called in a couple days later; same thing. Finally on the third call they "found" the late fee and waived it, but only after I agreed to drive immediately to the nearest Wal-Mart and pay my bill that day. (An online payment wasn't acceptable because it would have taken two or more days to be processed.)

Makes you wonder if these "problems" in finding the charge are just a way to wear the customer down in hopes he or she will just give up, not call again, and just pay the unjustified charge. Another way companies hide these late fees is to put them on a separate part of the bill, rather than itemizing them along with the charges. Many consumers, especially those who don't pay the full balance, just look at the amount due (or minimum payment) and write a check. The late fee alone might be more than the minimum payment, so they actually took a step backward that month, even if they charged nothing -- not even counting interest.

    Bookmark   July 28, 2004 at 3:52PM
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Ah..so... I've noticed with various CC bills that I have a 14 day window from the receipt of the statement to the pay due date. I could've sworn I used to have 20 days on some of them. And I once had a payment credited to the statement AND was assesed a late charge on the same statement because the payment was credited 1 day later than the payment due date! In the words of Reader's Digest "That's Outrageous!"

    Bookmark   July 28, 2004 at 5:16PM
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I heard an account on the radio of someone who owed about $2300 on a CC, didn't charge anything more, made monthly payments for two years that totalled about $2000, and wound up still owing $2300. That used to be called loan sharking but since CitiBank does it, I guess it's respectable.

    Bookmark   July 28, 2004 at 5:40PM
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Cube1067, that happens all the time. In years past, companies usually did not hit you with the late charge unless they had not received the payment before the account rolled over to the next billing cycle with no payment being received. So, in effect, you had maybe 5 to 7 days after the payment due date as a "grace period."

Now many companies will add the late charge if the payment is even one day late.

As far as what Maxwell said about the credit industry needing reform, I agree. Much of it could be accomplished with one simple rule: All companies who receive payments via the mail should be required to accept the date of the payment's postmark as the date the payment was made.

This would end the practice of delaying the processing of payments to increase late fee revenue, and would introduce some accountability: I know of no other business where a company can charge you $20, $30 or even $50 or more simply on their say so, with absolutely no proof that the money was actually owed. It should simply be illegal to charge the consumer a late fee without hard documentation that the payment was late, and a postmark is the only such documentation that could exist.

    Bookmark   July 29, 2004 at 12:29AM
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That would help, Ken.

Our CC company used to be located in North Dakota, probably because they could charge higher interest rates there than in other states. I remember a rep telling me that sometimes in the winter, receipt of their mail could be delayed for a week or two because of blizzards! She was pushing me to have my payment automatically made electronically, which I didn't want to do.

Now they have the option of making payments over the phone. That works well because I can control when and how often I make payments (I sometimes make several smaller ones during the month) and know that it will be processed the same day. It's also a lot easier than writing a check, finding a stamp, etc.

Of course, you do lose the advantage of being able to play the float.

    Bookmark   July 30, 2004 at 11:10AM
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Maxwell, with the new ellectronic banking laws going into effect in Sept., we'll lose the float anyway.

    Bookmark   August 8, 2004 at 1:55PM
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Do you know if the banks will still be able to get away with those ridculous mult-day holds they put on checks?

On the subject of CC fees, I forgot to mention one other reason people get in so much trouble. When someone is late making a CC payment, it's typeical for some CC companies to automatically raise the interest rate because the cardholder's credit rating score has dropped. This can happen from only a single late or missed payment. Even worse, if the cardholder has other CC cards, s/he may find the interest rates boosted on them as well, even if all payments on the other cards are timely and current.

The higher rates, of course, make it that much harder for the financially strapped CC holder to make the next payments on time, thus triggering more late charges and further boosts in interest rates. This situation can rapidly snowball to the point where balances on the CCs continue to rise even if the CC holder stops using the cards.

    Bookmark   August 17, 2004 at 11:05AM
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Since we travel alot, I have all my CC cards (except SEARS refuses to do so, on min auto repay. That way the mim amount gets paid and I still can pay what I want to without a late charge..American express won't do it either, they want me to call in, or put the payment on another card and also, because we used one of their checks to put money into a checking account, this is a cash advance and that amount never gets paid until the charges get paid, and remains at a 0 balance for at least 30 days. Therefore NOTHING gets charged on AE. Any time you trasfer balances, the smallest amount interest charges get paid first--

    Bookmark   August 24, 2004 at 12:17PM
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FirstUSA will credit an online payment up to near midnight the day it is due. Citibank places a 3 day minimum on payments made online.
Citibank was sued and lost a suit over multiple payments per billing cycle not being credited correctly. There response to the suit was to require binding arbitration on all accounts.
I have not used a Citibank card in a couple years now. They can place their policies in a place the sun never shines...

    Bookmark   October 2, 2004 at 10:18PM
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Didja see Suze Orman's show this Saturday? A young woman was told by a Citibank rep that she could not take her original contributions out of her Roth IRA without penalties. Even though the young woman repeatedly stated it was a ROTH, the rep insisted she would have to pay a penalty.

Just another Citibank story.

    Bookmark   October 17, 2004 at 2:38PM
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They call them "credit" cards, but on the day before I used one, I had credit - but no debt.

On the day that I use one, I am in debt.

So - they're really "debt" cards.

How's the easiest way to reduce your effective income?

Instead of buying things for cash when you can afford them, buy them using a loan.

That way, you get the stuff now - but you have to use part of your income next month to pay rent on the borrowed money, thus having less remaining in your pocket to buy the same stuff that you did, last month. Same deal every month until the loan is paid in full.

The most effective way to avoid late fees, penalty, etc. on credit card balances is to pay the balance owing in full, each month.

It may make sense to borrow to purchase capital goods, e.g. a home, furniture or a car.

But if you can't afford the consumer stuff that you use up right away on your current income, how will you be able to afford them later when part of your income must go to pay not only the loans that you made to buy the consumables - but rent on the borrowed money in the meantime?

Citi Financial offers to make me a loan - really enthusiastic.

When I call to ask the rate, it's up there around 25 - 30%.

When I have a (currently unused) fully secured line of credit on which I would be required to pay about 4.25% were I to use it.

Think I'm about to take them up on their offer????

I may be dumb - but I ain't stupid!

(No comments from the cheap seats, please)!

Good wishes in your effort to make *your* money work best for *you*, rather than for the other guys. Especially when you have the choice.

joyful guy

    Bookmark   October 19, 2004 at 3:12PM
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