# Grr! CitiBank To Charge "Deadbeat" CC users! **URL:** \ **Category:** The BBQ Pit\ **Created:** [October 28, 2009, 3:52pm UTC](https://boards.straightdope.com/t/grr-citibank-to-charge-deadbeat-cc-users/515456 "2009-10-28T15:52:39Z")\ **Posts on this page:** 20\ **Page:** 5
**Author:** ![Una\_Persson](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/una_persson/32/346_2.png) [@Una\_Persson](https://boards.straightdope.com/u/Una_Persson)\ **Post date:** [October 29, 2009, 4:57pm UTC](https://boards.straightdope.com/t/grr-citibank-to-charge-deadbeat-cc-users/515456/81 "2009-10-29T16:57:59Z")
> [@](#): > > If the responses from “deadbeats” in this thread are any indication, I’d say that people are just going to drop the card. I’m a “deadbeat” who hasn’t paid interest on a credit card since the Reagan Administration. I make about $600 a year cash on my cash-back cards, and never buy anything that I would not otherwise have bought. (I also never use cash advances and thus pay no fees there either.) If my card issuers want to charge me $20 a year I’d still be $580 to the positive, so thinking about it unemotionally (the only way in which money should be thought of) I have no incentive to really shake things up. ---
**Author:** ![rivulus](https://avatars.discourse-cdn.com/v4/letter/r/839c29/32.png) [@rivulus](https://boards.straightdope.com/u/rivulus)\ **Post date:** [October 29, 2009, 5:11pm UTC](https://boards.straightdope.com/t/grr-citibank-to-charge-deadbeat-cc-users/515456/82 "2009-10-29T17:11:14Z")
> [@Una\_Persson](#): > > I’m a “deadbeat” who hasn’t paid interest on a credit card since the Reagan Administration. I make about $600 a year cash on my cash-back cards, and never buy anything that I would not otherwise have bought. (I also never use cash advances and thus pay no fees there either.) If my card issuers want to charge me $20 a year I’d still be $580 to the positive, so thinking about it unemotionally (the only way in which money should be thought of) I have no incentive to really shake things up. OK, but what if it’s not your card **s** but just one of your cards? Would you shake things up a little by canceling the one with a fee and shifting your purchases to the others? I have three that all offer cash back. I would be perfectly happy (in an unemotional way) to drop one if they gave me a reason. ---
**Author:** ![Una\_Persson](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/una_persson/32/346_2.png) [@Una\_Persson](https://boards.straightdope.com/u/Una_Persson)\ **Post date:** [October 29, 2009, 6:03pm UTC](https://boards.straightdope.com/t/grr-citibank-to-charge-deadbeat-cc-users/515456/83 "2009-10-29T18:03:17Z")
> [@rivulus](#): > > OK, but what if it’s not your card **s** but just one of your cards? Would you shake things up a little by canceling the one with a fee and shifting your purchases to the others? I have three that all offer cash back. I would be perfectly happy (in an unemotional way) to drop one if they gave me a reason. If I could find someone who could beat $580 back a year net, but I don’t (and getting multiples of the same cash back card is hard). I guess it is possible. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [October 29, 2009, 7:38pm UTC](https://boards.straightdope.com/t/grr-citibank-to-charge-deadbeat-cc-users/515456/84 "2009-10-29T19:38:35Z")
> [@D\_Odds](#): > > I don’t bother calling customer service, as the person on the line is powerless to do anything about it, didn’t make the decision, and shouldn’t really care. I just change providers, like I did when Citi started screwing up my account and not fixing it. I wouldn’t yell at the poor person on the other end of the phone, but I would request that he/she take down and report my reason for dumping the card. So far, so good, though. > [@](#): > > Would you prefer not profitable _enough_. At $48 billion annually, I can’t imagine the merchant fees not covering operating costs and leaving a few sheckels afterwards, but I don’t know the operating costs. That statement I agree with - and it neatly summarizes the reason for our current mess. Banks considered reasonably safe businesses not profitable enough, and so went into increasingly risky ones, without enough capitalization (because that cuts down on the return.) > [@](#): > > Also, I’m betting that their ability to datamine accounts on an individual level has grown quite a bit over the last decade (I thought I said that before, but I may have edited it out). My daughter, who is in grad school in behavioral economics, has studied this. I do data-mining myself for work. It gives a lot of good information on behavior, but does not consider shifts in the economic climate. I mentioned their policy of trying to get consumers to keep the maximum balance below a default level - that is set by datamining. > [@](#): > > Discover is a different story. Despite being around since 1985, it never really gained traction. Discover wants to put as many cards as possible out there, because more cards means more demand to use them at stores, which means more stores will sign up to accept Discover. Discover also charges higher merchant fees than does Visa/MC. Visa and MC have a 20-30 year head start (1958 and 1966, respectively, I believe). This is probably going to backtrack a little on what I said early (as I’m not writing a dissertation nor being edited), but there was a time when any customer was a good customer for Visa/MC. They wanted consumers to demand merchants to accept their cards. I don’t know if you are old enough to remember when major department stores only accepted their own credit cards and not Visa/MC, or when you couldn’t buy gas or groceries on credit. Now, Visa/MC have saturated the market. No need for every individual to demand merchants to accept Visa/MC. We’ve had Discover from about the beginning, when it was still owned by Sears. I’m old enough to remember when Diners Club was the only game in town. Gas stations have accepted credit for a very long time - but when I started driving, they only accepted their cards, just like the department stores. I used to have a large set of gas cards and department store cards. I haven’t seen any campaigns from Discover requesting our help in adding merchants. It is rare when I have to use my (still free) Visa. In Europe, however, no one takes it. When I started working for Western Electric, in 1980, Bell System policy was not to use credit cards on business trips, including personal ones. Air fare and rental cars were direct billed, and we got a cash advance for hotel and meals. Things were a lot different back then. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [October 29, 2009, 7:57pm UTC](https://boards.straightdope.com/t/grr-citibank-to-charge-deadbeat-cc-users/515456/85 "2009-10-29T19:57:11Z")
> [@BlinkingDuck](#): > > We are even starting to see an uptick of combining unrelated databases to analyze the profitability of customers. > > Many may find this repulsive. I find it fascinating. I’ve even been tempted to see if I can land a position doing this sort of stuff 🙂 Hope you know a lot of math! Take a look at **Data Mining** by Mehmed Kantardzic, IEEE Press/Wiley. A bit old - Google was just starting when it was published - but a good book on the subject. I have no problem using my supermarket loyalty card since it increases the chances of my getting a coupon I’ll actually use. Done well the store can keep inventory I’m interested in buying with less waste, which helps them both increase profits and lower prices. It is good stuff. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [October 29, 2009, 8:00pm UTC](https://boards.straightdope.com/t/grr-citibank-to-charge-deadbeat-cc-users/515456/86 "2009-10-29T20:00:41Z")
> [@Maeglin](#): > > It seems to give people a perverse sort of pride to think they are somehow gaming the system by paying on time and actually using rewards currency. > > Despite what you might think, you are actually very profitable (for the most part), especially if you pay a fee to carry the card. So please, keep on doing what you’re doing. I don’t think anyone objects to the banks making a profit on cards that work well for them. I hope Discover is making a ton on me - I’m getting a ton of cashback from them with no fees and no interest payments. What I do object to is raising fees to make up for losses on their high interest but risky accounts. I’ll walk, and get an account with a company that didn’t screw up. From what I read, this is the real reason behind the hiking of fees. ---
**Author:** ![BlinkingDuck](https://avatars.discourse-cdn.com/v4/letter/b/eada6e/32.png) [@BlinkingDuck](https://boards.straightdope.com/u/BlinkingDuck)\ **Post date:** [October 29, 2009, 8:21pm UTC](https://boards.straightdope.com/t/grr-citibank-to-charge-deadbeat-cc-users/515456/87 "2009-10-29T20:21:32Z")
> [@Voyager](#): > > Hope you know a lot of math! Take a look at **Data Mining** by Mehmed Kantardzic, IEEE Press/Wiley. A bit old - Google was just starting when it was published - but a good book on the subject. > > I have no problem using my supermarket loyalty card since it increases the chances of my getting a coupon I’ll actually use. Done well the store can keep inventory I’m interested in buying with less waste, which helps them both increase profits and lower prices. It is good stuff. I am Senior Consultant (Advanced Analytics) at my company…yea…I likes da math 🙂 I think I will check out that book. I do not work with real down-and-dirty data mining in my job…but I get REEEAAAALLLL close 🙂 I think my current skills/experience would transfer well even to a senior-type position. ---
**Author:** ![D\_Odds](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/d_odds/32/2882_2.png) [@D\_Odds](https://boards.straightdope.com/u/D_Odds)\ **Post date:** [October 29, 2009, 8:41pm UTC](https://boards.straightdope.com/t/grr-citibank-to-charge-deadbeat-cc-users/515456/88 "2009-10-29T20:41:30Z")
> [@Voyager](#): > > I haven’t seen any campaigns from Discover requesting our help in adding merchants. It is rare when I have to use my (still free) Visa. In Europe, however, no one takes it. I see a few who don’t accept either Discover, AmEx, or both. Generally, they are small, independent operations who only begrudgingly accept Visa/MC. Putting on my smelly, ratty marketing hat, I’d say Discover has to be careful about getting customers to actively find stores not accepting their card. It might give the impression that their card is not worthwhile. They’ll probably use subscription numbers and demographics to sell the card to merchants. At least, that’s how I’d do it, but I’m really lousy at sales and marketing. > [@](#): > > That statement I agree with - and it neatly summarizes the reason for our current mess. Banks considered reasonably safe businesses not profitable enough, and so went into increasingly risky ones, without enough capitalization (because that cuts down on the return.) The banks stopped competing just against each other, and started competing with the Morgan Stanley’s, Goldman Sach’s, etc. when the Glass-Steagall Act was repealed. Banks felt that the act unfairly restricted them in ways their international competition was not, and that the big investment houses were offering more bank-type products without having the same restrictions, reducing their ability to attract high net worth depositors. At the time, I agreed with the bank’s viewpoint. I was wrong. ---
**Author:** ![Fear\_the\_Turtle](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/fear_the_turtle/32/2926_2.png) [@Fear\_the\_Turtle](https://boards.straightdope.com/u/Fear_the_Turtle)\ **Post date:** [October 29, 2009, 8:49pm UTC](https://boards.straightdope.com/t/grr-citibank-to-charge-deadbeat-cc-users/515456/89 "2009-10-29T20:49:45Z")
> [@D\_Odds](#): > > Let me see if I understand this: > > - You have a credit card issued by Citibank which you use for shopping > - You borrow money from Citibank through the credit card > - You pay back the money in a timely fashion, so that there are no interest charges There **are** interest charges, they are just paid by the merchant, not me. Typically 2% per transaction [Interchange fee - Wikipedia](http://en.wikipedia.org/wiki/Interchange_fee) [QUOTE=wiki link] _In the United States, the fee averages approximately 2% of transaction value_. [/QUOTE] As you point out below, the term of the loan (if paid off monthly) is \< month, or over 24% APR > [@D\_Odds](#): > > So Citibank has made a small fee on the transaction, and in your opinion, that is enough. If you call 24% APR or … [QUOTE=wiki link] _Card issuers now make over $30 billion annually from interchange fees_. [/QUOTE] .. a small fee, then more power to you. But stop repeating the old canard that CC companies don’t make money off people who pay their balances in full every month ---
**Author:** ![gigi](https://avatars.discourse-cdn.com/v4/letter/g/a587f6/32.png) [@gigi](https://boards.straightdope.com/u/gigi)\ **Post date:** [October 29, 2009, 9:12pm UTC](https://boards.straightdope.com/t/grr-citibank-to-charge-deadbeat-cc-users/515456/90 "2009-10-29T21:12:05Z")
hijack, but is your name Fear and you’re a turtle, or are we being instructed to fear the turtle? I’ve liked turtles heretofore but would like to know how to proceed. ---
**Author:** ![D\_Odds](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/d_odds/32/2882_2.png) [@D\_Odds](https://boards.straightdope.com/u/D_Odds)\ **Post date:** [October 29, 2009, 9:43pm UTC](https://boards.straightdope.com/t/grr-citibank-to-charge-deadbeat-cc-users/515456/91 "2009-10-29T21:43:44Z")
> [@Fear\_the\_Turtle](#): > > There **are** interest charges, they are just paid by the merchant, not me. Typically 2% per transaction [Interchange fee - Wikipedia](http://en.wikipedia.org/wiki/Interchange_fee) > > As you point out below, the term of the loan (if paid off monthly) is \< month, or over 24% APR > > If you call 24% APR or … > > .. a small fee, then more power to you. But stop repeating the old canard that CC companies don’t make money off people who pay their balances in full every month Go back and read your wiki link. I did, and I’ve talked quite a bit about the merchant fees (up to $48 billion now). It’s a per transaction fee, not an interest charge. If you spend $100, then on average the banks make $2. Not 24% annually. I’ve also noted that I don’t think that the operating costs, too which I’ll include funding all the rewards programs, amount to $48 billion, and that I don’t know what the profit margin truly is. I did see one place that said rewards programs are 40% of the fee, operating costs around 13%, and the remainder funds marketing and profits, but that was a merchant site trying to rally people against banks. Neither has the consumer’s best interest in mind. As I said, re-read the wiki. It’s all there (ETA: interchange fees are transaction fees, not interest charges, that is). When come back, bring (humble) pie. ---
**Author:** ![D\_Odds](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/d_odds/32/2882_2.png) [@D\_Odds](https://boards.straightdope.com/u/D_Odds)\ **Post date:** [October 29, 2009, 9:48pm UTC](https://boards.straightdope.com/t/grr-citibank-to-charge-deadbeat-cc-users/515456/92 "2009-10-29T21:48:14Z")
P.S. **Giraffe** , that is why I sometimes feel it necessary to spell things out in small words. One would think the difference between fees and interest charges apparent. ---
**Author:** ![Fear\_the\_Turtle](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/fear_the_turtle/32/2926_2.png) [@Fear\_the\_Turtle](https://boards.straightdope.com/u/Fear_the_Turtle)\ **Post date:** [October 29, 2009, 10:29pm UTC](https://boards.straightdope.com/t/grr-citibank-to-charge-deadbeat-cc-users/515456/93 "2009-10-29T22:29:49Z")
**D-Odds** Sorry if I wasn’t clear. I was posting quickly from work and had to rush. I didn’t mean to imply it was an interest charge - just to compare it to an interest charge. You seem to be saying (and correct me if I’m misstating what you are trying to say) that if I buy something with a CC and pay it off at the end of the month - I’m getting an interest free loan from the CC company. My point was they are getting the equivalent of an interest payment from the merchant even if they don’t call it that. If I give you $100 and you repay me $104 next month (or if you repay me $100 and a 3rd party pays me $4), it doesn’t matter whether you call the $4 interest, a fee, or whatever - it is the equivalent of a 24% APR. No need for anyone to bring humble pie - I think we are just talking past each other. Oh - I agree the $30 billion I quoted was just the gross from the fees and not the net. But I doubt operating costs are $30B to process on time payments. I just threw the number out as food for thought **gigi** - Fear the Turtle is a motto from Univ of MD. ---
**Author:** ![Fear\_Itself](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/fear_itself/32/19637_2.png) [@Fear\_Itself](https://boards.straightdope.com/u/Fear_Itself)\ **Post date:** [October 29, 2009, 10:55pm UTC](https://boards.straightdope.com/t/grr-citibank-to-charge-deadbeat-cc-users/515456/94 "2009-10-29T22:55:25Z")
> [@D\_Odds](#): > > Also, **Anne** , the banks want to lose the accounts that pay off every month. They want to keep people who carry balances. So it makes sense, from the banks’ point of view, to only charge the customers they don’t like. And raise the rates on the all the rest who carry balances. They really want to just bleed everybody. ---
**Author:** ![Giraffe](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/giraffe/32/129_2.png) [@Giraffe](https://boards.straightdope.com/u/Giraffe)\ **Post date:** [October 29, 2009, 11:09pm UTC](https://boards.straightdope.com/t/grr-citibank-to-charge-deadbeat-cc-users/515456/95 "2009-10-29T23:09:48Z")
> [@D\_Odds](#): > > P.S. > **Giraffe** , that is why I sometimes feel it necessary to spell things out in small words. One would think the difference between fees and interest charges apparent. And posts like this are why you come across like a douchebag. ---
**Author:** ![LurkMeister](https://avatars.discourse-cdn.com/v4/letter/l/3da27b/32.png) [@LurkMeister](https://boards.straightdope.com/u/LurkMeister)\ **Post date:** [October 30, 2009, 12:04am UTC](https://boards.straightdope.com/t/grr-citibank-to-charge-deadbeat-cc-users/515456/96 "2009-10-30T00:04:08Z")
> [@D\_Odds](#): > > I see a few who don’t accept either Discover, AmEx, or both. Generally, they are small, independent operations who only begrudgingly accept Visa/MC. Putting on my smelly, ratty marketing hat, I’d say Discover has to be careful about getting customers to actively find stores not accepting their card. It might give the impression that their card is not worthwhile. They’ll probably use subscription numbers and demographics to sell the card to merchants. A friend of mine liked the cashback bonus he got on his Discover Card so much that he made a point of offering it first, even at stores that he already knew did not take it, as a (not so) subtle attempt to get them to consider taking Discover. I’ve had a Discover Card ever since they were first offered, and have had very few complaints about their service. A few months ago my due date was changed from the 16th (which it had been since I got it) to the 12th. I was so in the habit of arranging to make my online payments shortly before the 16th that one month I forgot about the change until the night of the 12th. Even though the payment wasn’t posted until the 13th, the next month’s bill did not show a late charge or interest. ---
**Author:** ![kaylasdad99](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/kaylasdad99/32/3398_2.png) [@kaylasdad99](https://boards.straightdope.com/u/kaylasdad99)\ **Post date:** [October 30, 2009, 12:10am UTC](https://boards.straightdope.com/t/grr-citibank-to-charge-deadbeat-cc-users/515456/97 "2009-10-30T00:10:30Z")
The constant use of the word “deadbeat” as a descriptor for low-profit customers who pay off their balances is a little grating. I wonder if the term “deadwood” would be more useful. ---
**Author:** ![BorgHunter](https://avatars.discourse-cdn.com/v4/letter/b/7c8e57/32.png) [@BorgHunter](https://boards.straightdope.com/u/BorgHunter)\ **Post date:** [October 30, 2009, 3:57am UTC](https://boards.straightdope.com/t/grr-citibank-to-charge-deadbeat-cc-users/515456/98 "2009-10-30T03:57:35Z")
> [@LurkMeister](#): > > A friend of mine liked the cashback bonus he got on his Discover Card so much that he made a point of offering it first, even at stores that he already knew did not take it, as a (not so) subtle attempt to get them to consider taking Discover. > > I’ve had a Discover Card ever since they were first offered, and have had very few complaints about their service. A few months ago my due date was changed from the 16th (which it had been since I got it) to the 12th. I was so in the habit of arranging to make my online payments shortly before the 16th that one month I forgot about the change until the night of the 12th. Even though the payment wasn’t posted until the 13th, the next month’s bill did not show a late charge or interest. Discover is my favorite credit card as well—far and away better than, say, Chase. I tend to prefer using it over my other cards whenever I make a purchase. I do make exceptions for small businesses, though. I tried once to use my Discover at one of the local ones, and the proprietor told me he didn’t take Discover or AmEx. He also told me why—as has been noted upthread, their merchant fees are higher. I’m happy to use my less-liked Chase Visa at these places—it’s a reasonable compromise, after all, for not having to hunt down an ATM before visiting local businesses. On the other hand, I think McDonald’s, SuperValu, Chipotle, etc. are large enough companies that the higher merchant’s fee isn’t going to harm their bottom line one bit. ---
**Author:** ![LurkMeister](https://avatars.discourse-cdn.com/v4/letter/l/3da27b/32.png) [@LurkMeister](https://boards.straightdope.com/u/LurkMeister)\ **Post date:** [October 30, 2009, 4:29am UTC](https://boards.straightdope.com/t/grr-citibank-to-charge-deadbeat-cc-users/515456/99 "2009-10-30T04:29:10Z")
I’m probably going to start using my Discover more, since my Chase card no longer earns me certificates for Borders. I pay my cards off in full every month, so I never paid much attention to the interest rates on them (I checked earlier today and my Discover is 11.24% and my Chase is 19.24%). The Discover is my oldest card now, so for the sake of my credit rating I’m going to do my best to hang on to it. ---
**Author:** ![LunarPlexus](https://avatars.discourse-cdn.com/v4/letter/l/7ab992/32.png) [@LunarPlexus](https://boards.straightdope.com/u/LunarPlexus)\ **Post date:** [October 30, 2009, 4:48am UTC](https://boards.straightdope.com/t/grr-citibank-to-charge-deadbeat-cc-users/515456/100 "2009-10-30T04:48:44Z")
> [@LurkMeister](#): > > I’ve had a Discover Card ever since they were first offered, and have had very few complaints about their service. A few months ago my due date was changed from the 16th (which it had been since I got it) to the 12th. I was so in the habit of arranging to make my online payments shortly before the 16th that one month I forgot about the change until the night of the 12th. Even though the payment wasn’t posted until the 13th, the next month’s bill did not show a late charge or interest. I had my date changed, too, and missed my due date twice. (Fool me twice, won’t get fooled again.) Discover jacked me to the default rate (29% ish, I think). I called and asked if they would reconsider the rate jump. \ “OK, Mr. Plexus, I am putting your account back to its previous rate and refunding your late fee.” Took about 2 minutes. Of course he then tried to upsell me some insurance, which took me five minutes to politely decline three times as I didn’t want to just hang up or tell him to f off. [Previous page](https://boards.straightdope.com/t/grr-citibank-to-charge-deadbeat-cc-users/515456.md?page=4) [Next page](https://boards.straightdope.com/t/grr-citibank-to-charge-deadbeat-cc-users/515456.md?page=6)