The antics of the credit card companies are well known by now, and periodically I have written posts about the subject as well. However, last week I got a first hand experience in how sleazy, obnoxious, insidious and malicious these card companies can be. My particular incident involved Citibank. Here is the story.
My wife insists on manually paying the credit card bills every month because she "wants to verify all the charges". The fact that we have never found a false charge and that even if we sign-up for automatically paying off our monthly bill we could still check and dispute any charge is not sufficient for her. For some reason, the fact that I download all credit card transactions into Quicken every day, also does not satisfy her. Anyway, our Citibank credit card bill was due on Thursday, May 14. On May 15, Quicken showed me a late charge on the card. My wife forgot to pay the bill. I immediately went online and paid off the card in full, I also initiated automatic bill payment. From now on, the bill will be automatically paid in full every month. However, while I made the full transfer on Friday, the charge could not clear until Monday, due to the weekend.
After the charge cleared, I called Citibank. I explained the situation and also explained that I had signed-up for automatic bill payment. I asked for the late fee and finance charges to be reversed, citing our long history with the bank and our excellent credit rating. Here is where the situation rapidly degenerated into a complete fiasco. The agent was willing to reverse a $39 late fee we were charged, but was not willing to refund a finance charge of $97. I was upset, but not overly so, after all paying late was our own fault and some penalty may have been justified. But then I started to do the math... a $97 finance fee for a 3 day late payment on a balance of $2,600? Something seemed fishy...
I asked the agent what interest rate was applied to our balance. He answered that the rate was 26%. My voice went up two octaves and my volume increased by 20 decibels. 26%? How was that possible? Our card had a rate of 8%... the agent calmly explained that as soon as the payment was late, the interest rate jacked up. I was steaming, but then I did the math and the numbers still didn't work out. How could even 26% yield a $97 finance charge in only three days? The nonplussed agent was glad to explain. In a calm and steady voice he told me that as soon as the payment was late, finance charges immediately begin to accrue on the full amount charged to the card, not only the amount that was late. Since we had charged another $3,800 (or something like that) that would become due on June 14, we were charged interest on that amount as well...
Now that's what I call insane. Here is the way I see it. The $3,800 would become due on June 14. I had paid off the full amount on May 17 - which in my book means that the $3,800 was not paid late, it was paid 27 days EARLY. So in my book Citibank was charging me a huge financing fee on money that was not yet due.
That is when I went berserk. I told the agent, admitedly, using a few unkind words, that I have had enough and that I did not care about the consequences. The account was paid in full and I wanted it closed that instant. In fact, I wanted to close all three Citibank accounts that my wife and I have owned for the past 8 years. I couldn't care less about any damage to our credit score. I could not be bothered to remember that the Citibank Mastercard is the card that we use with all vendors that do not accept American Express. I just wanted out, and I wanted out that instant.
The customer service representative was undaunted. He did not miss a beat and very politely told me to hang on while he transferred me to the appropriate person. The next person who got on the line was a very collected customer retention specialist. He spoke to me like I was a five year old throwing a tantrum - which in many respects was a good description for me at the time - without wasting a second he immediately:
1. Reversed the finance charges;
2. Confirmed the return of the late fee; and
3. Gave me a 1% cash back on all purchases for the next 6 months.
He "asked for my permission" to keep the accounts open and made a very deliberate effort to chat me up. He explained that I was a great customer, with an excellent credit history and that he understood how everyone can make mistakes - himself included. You know how in the movies you see police officers talking would-be jumpers off the ledge? That is pretty much how this guy talked to me. I thought it was condescending, but ultimately it was effective. I got off the ledge and I agreed to take the bribe and keep the accounts open.
Well, why did I do that? Actually, it's very simple. Even though I was furious, closing the accounts would have been against my self interest. I was perfectly willing to break a few dishes and walk away in my anger, and in my mind I would have been justified in doing so, but I am not out to punish Citibank, nor am I vain enough to imagine that anyone at Citibank actually cares if I stay or go. They care about statistics and big numbers. A single private customer makes no difference to them. Closing the accounts would have left our credit scores in worse shape and would have created a hassle of trying to find a new card in a hurry. There was nothing to gain from walking, and something to gain by staying.
From my perspective, writing this post and helping folks to understand the true nature of Citibank is a better way to deal with these would-be highway robbers than closing my accounts would ever be. In this context, it is interesting to point out that some of the penalties and fees that Citibank charged me would have been illegal under the new Credit Card Bill of Rights that was signed into law just last week. If an MBA personal finance blogger can fall prey to these unconscionable lawful muggers, I am guessing the vast majority of the population is also susceptible.
A final thought on this situation: I find it appalling that such behavior is going on while Citibank and their ilk are relying on public funds and interest free loans from the government to finance their activities. They are in effect taking our money, lending it back to us, and charging us exorbitant fees for the pleasure of doing business with them. Well, Citibank, consider this my one finger salute to you.
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