What They Don’t Tell You About the Citi-Simplicity Card – Benefits With Downsides
Roughly 10 years ago Citi rolled out their Citi-Simplicity card marketing towards those who don’t like fees of any kind. The teaser of the promotion was no late fees and no fees of any kind. Who doesn’t like late fees? Those who have or are habitually late with their credit card payments.
Their commercial showed a cardholder who was late with his payment. However, he wasn’t sweating it because he knew he wouldn’t have a fee charged against him. What the marketing conveniently failed to communicate, that if you were a minute late your low interest rate would turn into a penalty interest rate in the high 20 percentage range.
So if you are late, you don’t get charged a fee. However, they will raise your interest rate to 28%.
This new addition of the Citi-Simplicity card has a teaser that is aimed at people who once again hate fees and penalty rates, and are paying high interest rates. The teaser is 21 months no interest on balance transfer (longest advertised free interest rate period on the market), no fees, and (this time) no penalty rates. So, if you are late, your interest rate won’t go up to penalty rates and you won’t owe a late fee.
Once again, Citi is irresponsibly marketing because they didn’t tell you if you were late with a payment they will place your account in default and you could owe the entire balance immediately. The Card Member Agreement which you don’t receive until after you get your card, has this fine print.
“Default. You default if you make a late payment, make a payment that is returned, go over your credit or cash advance limit, file for bankruptcy, or fail to comply with any term of this Agreement. If you default, we may demand immediate payment of the entire account balance if permitted by law.”
Closing Your Account. You may close your account. We may close or suspend your account at any time for any reason without telling you ﬁrst. If your account is closed or suspended, you must still repay the entire account balance as required by this Agreement.
Collection Costs. If we use a lawyer to collect your account, we maycollect reasonable attorneys’ fees, costs, and expenses of any legal action, as permitted by law.
Can you imagine that you go into a default, Citi runs up some legal bills on your behalf, and you get to pick up the tab? Interest is a cost of credit. Now legal fees are as well. That sounds like a form of a penalty rate.
So let’s revisit the marketing.
The Citi-Simplicity Card…..No Late Fees and No Penalty Rates if you are ever late with a payment. (However, we will place you in default if you are ever late with a payment and let you pick up the legal fees.)
The credit card industry is the only industry that markets a benefit with a downside.