Citibank N A Informative - Citibank "Simplicity" Visa - Buyer Beware - Watch Out For Hidden Interest Rate Penalties and Consequences if You Pay Late
The latest trend in the credit card industry is to offer cards with no late fees. Credit card companies have done surveys and learned that people despise late fees. More credit card companies are sending out solicitations that scream, "No Late Fees". The latest and most prevalent offer of this type that we see heavily marketed in both print and TV media is the Citibank "Simplicity" Visa card which promotes "No Late fees as long as you make a purchase each month with the card". What people do not realize is that instead of charging you late fees the companies are hitting you with punitive interest rates if your payment is late by 1 minute or more. Therefore, you will immediately see your interest rate jump from 13 or 14 percent to about 30 or even 40 percent in some cases. You are automatically reported to the credit bureaus if you miss a payment so other creditors can now implement the Universal Default Rate.If you receive one of these offers in the mail, toss it immediately, as the offer is too good to be true.
Beware of Citibank's strategy behind this "No Late Fees" Visa. Here is what Citibank is trying to do to consumers to rope them in and hold them hostage since they are loosing revenue and market share to home equity loans as consumers use their homes to get loans and dump their high interest rate credit cards.
Citibank's ad slogan goes something like "No late fees! Hey, look we know you're only human. No one is perfect. So why should you get stuck with late fees just because you're a few days late? Go ahead, pay late. No problem. We'll waive the $39 late fee."
What does offering no late fees say to you? To me it says that paying on time is not critical and it's an invitation with permission to pay late.
In the fine print of this Simplicity MasterCard application, CitiBank makes it clear that to get your late fee waived you have to make at least one purchase or cash advance each billing period.
Next "and this is huge" even though late fees are waived for regular chargers, cardholders are subject to Citibanks punitive interest rate of 30.74 percent APR if they fail to make a payment to Citibank when due.
So let me reiterate: Citibank lures you in with promises of no late fees and implied permission to just go ahead and pay late but when you exercise your new feature that attracted you to this card in the first place, yhey bump you to 30.74% interest, report you to the credit bureaus and your credit score falls to depths unknown.
They lure you in with a promise of no late fees and then when you take them up on the feature, they slap you down with an obscene interest rate. This is a complete bait and switch tactic and constitutes misrepresentation and potential fraud. I am going to have this investigate and will let everyone know what I find.
The ads promote the card with the slogan "Pay no late fees as long as you make a purchase each month with the card". The ad markets the card with the implied message "As long as I make one purchase a month with the card I can be late with my payment and not be penalized". No where in the ads does Citibank disclose the punitive interest rate punishment if you pay late one time and how they will report you to thecredit bureau. Citibank wants the consumer to have this perception and not read the cardholder terms, as most people don't, because once you do pay late one time then Citibank has ruined you and now has a customer who has no other options except to pay what they charge you.
You have now made a late payment based on the pereception of the ad you saw and you did not read the cardholder terms before accepting and using the card. Citibank has placed you in default and your interest rate now jumps to 31% because the default rate is 24.99% plus prime if you make one late payment. Citibank is also going to report you immediately to the credit bureau as late. Your FICO score now drops to a sub-prime level and you cannot get approved for another card so you can dump Citibank and transfer the balance because you have a late payment on your credit report. Citibank has won and they now have you where they want you so they can exploit you.
The moral to this is to not fall prey to Citibank's advertising and do not apply for this card because Citibank will ruin you if you do and it may be intentional, like posting your payment one day late so they can place you in default. Citibank's strategy is well thought out and most people will not see the hidden agenda that Citibank has planted with this card.