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Citibank's Citi Simplicity Card: Now You Can Avoid Late Fees
By: Ed Vegliante
Citibank recently launched a new credit card that takes away an important sting
felt by many consumers: late fees. In an unusual move, the bank is now offering
consumers “permanent forgiveness” for late payments and will no longer assess
the customary $39 late fee when a payment arrives after the due date. While the
offer sounds great on surface, if you dig a little deeper you will soon learn
that there are some things about the new Citi Simplicity card that can cost you
more money in the long run. Let’s take a closer look at what this credit card
issuer is really offering with its new card.
The Problem
Consumer advocates have long cried foul when it has come to credit card late
fees and penalties. Not only would you be assessed a one time late fee ranging
from $29 to $39 if your payment arrived late, but your interest rate could be
permanently increased to the default rate, typically as high as 29% annually.
This “double whammy” further made it difficult for you, the credit card holder,
to ever pay down debt.
Citibank’s Solution
In a bold marketing move, Citibank – one of the largest issuers of credit cards
in the world – came up with its Citi Simplicity card in response to criticism
levied by consumer advocates at the industry and at the bank personally. The new
card, with no annual fee and no late fees, is designed for card holders who have
been bitten by the late fee bug. No longer will you, as a card holder, have to
worry if the check you sent off just before the payment due date arrived on
time. With the Citi Simplicity card, a late arriving payment will be credited
and no late fee assessed.
Taking a Closer Look
Within Citibank’s offer are a few things that you should understand before you
make the switch:
1. A late fee will not be charged to your account, but your interest rate may
surge to the default rate. The default rate, in this case, can be as high as
29%! That’s bad news for you especially if you had a fixed low rate previously.
2. You could also get a false sense of security by incorrectly believing that
paying late regularly doesn’t harm you in some other ways. For instance,
consistently forwarded late payments can become part of your credit report,
thereby negatively affecting your ability to purchase a car or a home down the
road at a favorable interest rate. Important to note, a higher interest rate can
add thousands of dollars to the purchase of a new home.
3. Finally, Citibank will waive the late fee only if you promise to continue to
use the card. This is bad news for you especially if you are trying to reduce
your balance each month without having to purchase something new, which simply
adds to your balance.
In all, the Citi Simplicity card has much more to it than what meets the eye.
For some people, the new card is a welcome change especially if you are one who
pays off his balance in full each month. If you aren’t, the Citi Simplicity card
may cost you much more in the long run. Should you fall into this second
category, it would be better for you to keep your existing card or shop for a
new card with other features and more favorable requirements.
Copyright 2006 Ed Vegliante.
About the Author:
Ed Vegliante runs the website http://www.Credit-Card-Surplus.com , a well
organized credit card directory enabling the consumer to compare and apply for a
variety of credit card offers including the Citi Simplicity Card.
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