# 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:** 7\ **Page:** 6
**Author:** ![Mama\_Zappa](https://avatars.discourse-cdn.com/v4/letter/m/71e660/32.png) [@Mama\_Zappa](https://boards.straightdope.com/u/Mama_Zappa)\ **Post date:** [October 30, 2009, 3:06pm UTC](https://boards.straightdope.com/t/grr-citibank-to-charge-deadbeat-cc-users/515456/101 "2009-10-30T15:06:21Z")
> [@kbear](#): > > Glad for an opportunity to have a little moan about this. I’ve just discovered my CC company (CIBC) is charging me interest on a zero balance. > > I got my statement yesterday for October and noticed a $30.00 interest charge and double checked to confirm that I had paid September’s balance before the due date, which I had. So I got out my bi-focals and read the fine print. Turns out that because I had paid August’s bill a few days late (and paid the interest in September) I was being charged interest on my Sept/Oct purchases, **for the sole reason that I am no longer a Quebec resident.** (where the card was issued) > > HUH? First of all, what kind of fucked up logic is there in charging interest at all on last month’s paid-on-time purchases because I did not pay the previous month’s on time? And second, what does where I live have to do with anything? > > I’m sure now someone will come along and give a perfectly reasonable explanation but for now I remain ??? It’s called “double cycle billing” and it’s scummy. > **[Understanding the Average Daily Balance Method for Credit Card Interest](https://www.investopedia.com/terms/a/averagedailybalance.asp)** > > Learn how the Average Daily Balance Method determines credit card interest charges, affecting your monthly bill. Explore its calculation and see practical examples. I suspect that Quebec prohibits this, but your current place of residence does not. It’s one of the things that will be prevented when the new US law takes effect, though of course that doesn’t benefit you in Canada. [http://www.creditnet.com/weekly-tips/bid-double-cycle-billing-goodbye.php](http://www.creditnet.com/weekly-tips/bid-double-cycle-billing-goodbye.php) ---
**Author:** ![Mama\_Zappa](https://avatars.discourse-cdn.com/v4/letter/m/71e660/32.png) [@Mama\_Zappa](https://boards.straightdope.com/u/Mama_Zappa)\ **Post date:** [October 30, 2009, 3:20pm UTC](https://boards.straightdope.com/t/grr-citibank-to-charge-deadbeat-cc-users/515456/102 "2009-10-30T15:20:13Z")
> [@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. I’d argue this, though. A “deadbeat” customer may not be as profitable as one who carries a balance. HOWEVER - said deadbeat is also a low-risk customer. There is zero chance the bank will get stuck with a bad debt from that customer. They’re getting the same current profits (their cut of the purchase transaction fees) as with a revolver, but they’ve got the tradeoff of low risk / low return (deadbeats) vs. higher risk / higher return (revolvers). I would argue that the ideal customer, and someone they want to keep, is someone who falls in the middle. Carries a balance but generally pays on time. A customer who’s been penalty-jacked to a 29% interest rate just might be very profitable… until they quit paying. Someone paying 5-15% is probably less likely to be overwhelmed by the interest, and more likely to keep up with it, but possibly less able to jump ship and move their money elsewhere… and is therefore the most desirable customer. A true “deadbeat” is likely someone in a good enough position, credit-wise, to jump ship to another lender. Slapping a “you aren’t profitable enough” fee on them might seem to make sense up front, but will cause the card issuer to lose even that small, safe profit. I suspect _this_ is why we’ve heard little solid evidence of the banks adding such a fee. ---
**Author:** ![Lightray](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lightray/32/391_2.png) [@Lightray](https://boards.straightdope.com/u/Lightray)\ **Post date:** [October 30, 2009, 3:42pm UTC](https://boards.straightdope.com/t/grr-citibank-to-charge-deadbeat-cc-users/515456/103 "2009-10-30T15:42:22Z")
Just got a note from Citibank informing me that they were upping their rate to 29%. They graciously gave me leave to opt out by Nov 29th – in which case, nothing changes, but they’ll cancel my card at its expiration next year and never talk to me again. I’m struggling to think what downside there is on this… Citibank is about my only card I don’t get points or money or _something_ back on, it’s now the highest rate, and I’ve only kept it because it was my first card and it’s nice having a 27+ year card on my credit report. Fortunately I get about a billion credit card offers a week. I’m sure I’ll find _one_ that looks good. ---
**Author:** ![Mama\_Zappa](https://avatars.discourse-cdn.com/v4/letter/m/71e660/32.png) [@Mama\_Zappa](https://boards.straightdope.com/u/Mama_Zappa)\ **Post date:** [October 30, 2009, 3:50pm UTC](https://boards.straightdope.com/t/grr-citibank-to-charge-deadbeat-cc-users/515456/104 "2009-10-30T15:50:17Z")
> [@Lightray](#): > > Just got a note from Citibank informing me that they were upping their rate to 29%. They graciously gave me leave to opt out by Nov 29th – in which case, nothing changes, but they’ll cancel my card at its expiration next year and never talk to me again… I’m assuming this isn’t related to any delinquencies… in which case I have to think they’re really making bad decisions. Killing the goose that lays the golden egg, and all that. If you don’t carry a balance, it affects you not at all except that you’ll think “huh, I won’t use THAT card”. If you carry a moderate balance, it pushes you one step closer to not being able to keep up with things and simply refusing to pay. Which lets them jack up late fees etc… but costs them money in lost repayments, collections fees etc. Another issue, nobody has griped about yet: raising the minimum payments due. I keep reading news stories about people who were managing their payments OK when the minimum was 2% (or whatever), the banks deciding to jack it up to 5%, and people not being able to manage that doubled amount. Yeah, it’s a bad idea to have that much debt. And yeah, the banks would really like to get some stuff repaid. And yeah, they probably took into account (or not, given bad decisions in the past few years) the fact that this would push some people into default and therefore _lose_ money for the banks… but this sort of thing is why the law that says “can’t change the rules for existing balances!” got passed. ---
**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 30, 2009, 6:17pm UTC](https://boards.straightdope.com/t/grr-citibank-to-charge-deadbeat-cc-users/515456/105 "2009-10-30T18:17:01Z")
> [@Mama\_Zappa](#): > > Another issue, nobody has griped about yet: raising the minimum payments due. I keep reading news stories about people who were managing their payments OK when the minimum was 2% (or whatever), the banks deciding to jack it up to 5%, and people not being able to manage that doubled amount. Yeah, it’s a bad idea to have that much debt. And yeah, the banks would really like to get some stuff repaid. And yeah, they probably took into account (or not, given bad decisions in the past few years) the fact that this would push some people into default and therefore _lose_ money for the banks… but this sort of thing is why the law that says “can’t change the rules for existing balances!” got passed. Unreasonably low minimum payments were just another way the companies kept people hooked with the maximum balance supposedly affordable. Raising them reduces the risk of default in the long run. I don’t know how they would do it gradually. If raising the minimum payment this much pushes someone in default, so would a big medical or car repair bill. I agree that they shouldn’t be allowed to change the rules for existing balances, but at least this change is in the direction of fiscal responsibility, and probably means less money to the banks in the long run. ---
**Author:** ![Mama\_Zappa](https://avatars.discourse-cdn.com/v4/letter/m/71e660/32.png) [@Mama\_Zappa](https://boards.straightdope.com/u/Mama_Zappa)\ **Post date:** [October 30, 2009, 6:24pm UTC](https://boards.straightdope.com/t/grr-citibank-to-charge-deadbeat-cc-users/515456/106 "2009-10-30T18:24:19Z")
> [@Voyager](#): > > Unreasonably low minimum payments were just another way the companies kept people hooked with the maximum balance supposedly affordable. Raising them reduces the risk of default in the long run. I don’t know how they would do it gradually. If raising the minimum payment this much pushes someone in default, so would a big medical or car repair bill. I agree that they shouldn’t be allowed to change the rules for existing balances, but at least this change is in the direction of fiscal responsibility, and probably means less money to the banks in the long run. Actually, I agree with you 100%. It’s the practice of doing so suddenly on existing balances that is the problem. Especially more than doubling (as in literally, from 2% to 5%). The news stories I read talked about people getting such notices, and the bank basically refusing to budge and suggesting to the cardholder that they just try to move to a different card or whatever. The people who were stuck by this practice and couldn’t dig up the extra 3% were exactly the ones who couldn’t easily find another way of paying it off. Sure, they shouldn’t have gotten into that fix, but the banks let them - nay, encouraged them - and now the banks are trying to change the rules retroactively. ---
**Author:** ![Lightray](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lightray/32/391_2.png) [@Lightray](https://boards.straightdope.com/u/Lightray)\ **Post date:** [October 30, 2009, 6:27pm UTC](https://boards.straightdope.com/t/grr-citibank-to-charge-deadbeat-cc-users/515456/107 "2009-10-30T18:27:01Z")
> [@Mama\_Zappa](#): > > I’m assuming this isn’t related to any delinquencies… in which case I have to think they’re really making bad decisions. Killing the goose that lays the golden egg, and all that. > > If you don’t carry a balance, it affects you not at all except that you’ll think “huh, I won’t use THAT card”. Oh, no. I pay off each month. So, I’m a “deadbeat” too. … Actually, 29% interest really won’t affect me. It’s just a dick move on their part so, yeah, won’t be using THAT card. [Previous page](https://boards.straightdope.com/t/grr-citibank-to-charge-deadbeat-cc-users/515456.md?page=5)