Savings Account & MMA Rates
CD (Certificate of Deposit) RatesA Bankaholic reader says her Citibank credit card recently offered to let her pay 1.99% APR on balance transfers through August 2011.
Sounded like a pretty good deal.
But something in the fine print made her hesitate: “Payments are allocated to pay off lower APR balances before higher balances.”
Wait a minute, she thought.
Doesn’t the Credit Card Accountability, Responsibility and Disclosure Act require payments in excess of the minimum payment to be applied to higher APR balances first?
Indeed it does.
This offer seems to be asking customers to waive that right if they transfer a balance to their Citibank card, and it wouldn’t be the first time we’ve seen it try to avoid the new rules.
By applying payments to the low-cost portion of the customer’s debt until its paid off, the bank could continue to collect interest on the high-cost debt for as long as possible.
I asked an expert at the National Consumer Law Center if credit cards can include specific terms in their agreements that essentially nullify one of the Credit CARD Act’s key rules.
Unfortunately, attorney Chi Chi Wu said they can.
While the preamble of the Credit CARD act discourages asking customers to waive their rights under the law, there’s nothing that makes it illegal.
She suggested I ask Citibank exactly how it intends to credit payments under these terms.
So I did. But after initially agreeing to find out, the bank’s public relations staff stopped returning my phone calls and emails.
The language Citibank uses in its balance transfer offers is very different from those we’ve seen from other big credit card issuers such as Bank of America and Capital One.
They clearly state that anything in excess of the minimum payment will go toward balances with the highest interest rate — just as the new law intends.
Bottom line: I would ignore all of the balance transfer offers Citi is promoting until it explains how payments will be credited.
And Citibank, you’ve got my number.
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