Recent feedback left by visitors of Smart Balance Transfers regarding new annual fees on Citi credit cards is providing a clearer picture of the situation. At present, visitors are reporting that the annual fee is $60, is due to take effect in April, and that they have low balances on the card and very high credit scores.
As noted in an earlier story about Citibank annual fees, the annual fee may be credited to certain accounts if spending is sufficiently high on the card. However, many people have reported that they intend to close their accounts rather than pay the annual fee.
One serious drawback to closing these accounts is the impact such an act will have on credit scores. Closing a credit card account, especially one with no balance, can increase a person’s credit utilization ratio if they have higher balances on other accounts. It can also shorten credit history if this is the person’s only, or first, credit card.
Unfortunately, Citi is charging a relatively substantial annual fee, while other companies are continuing to offer no annual fee cards, making the decision to keep the card open a difficult one. Thus, if one wishes to protect their credit score, one option to consider is opening a new credit card with a company that does not charge an annual fee. This may offset the damage done by closing a Citi account, as it will increase available credit before the closing of the Citi account negatively impacts credit scores. Opening a new credit card with a different company before closing the account may also result in better rates on the new card, as that account will be based on a better credit profile.
-Jeffrey Weber
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February 19th, 2010 at 9:46 am
If anyone can provide a copy of the annual fee notice, it would be greatly appreciated. If you do send a copy, please use a sharpie to black out all personal information (name, account number) as I would like to publish this so it can be reviewed and compared to other letters going out in the mail. Thanks in advance for your help.
February 19th, 2010 at 11:09 am
I am closing the CITIBANK credit card account even though it was my first and I had it for over 20 years. I can care less about a drop of my credit score. If nobody is going to stand up against these so-called big banks with the worse service and treating customers like POS, you just don’t know what they are going to do to you next.
February 19th, 2010 at 11:20 am
I think a lot of people share your opinion, though the impact on credit scores should not be ignored. For some, the impact may be small. For others, closing a Citi account without opening a new account can cause significant problems. Hopefully, these annual fees won’t be impacting people who are in the process of getting a mortgage.
February 19th, 2010 at 12:28 pm
All of you credit card pundits don’t get it, do you? If all seven credit cards in my wallet pulled the same stunt, I would be required to either pay $420/yr. in Annual Membership Fees ($60×7), or be required to spend an aggregate total of $16,800/yr. ($2,400×7), simply to maintain the accounts as “fee free”. However, you should note that all the while, for twelve consecutive months, the cards that charge such fees will be holding onto your $60 and doing God knows what with it. You only get it back *later*. There is no “avoidance” of the fee, as your money is tied up in the meantime.
Now, granted, it may be the case that it’s not a big deal for some, but recall that not all cards are created equal. You might be charge $60 for that card with great service and benefits, but also might be charged $60 foe that card with no benefits that you only carried for emergencies.
To ignore the fact that we’d all be screwed if all companies did this is to ignore the whole point of the discussion.
As for those seven cards I spoke of? One, from 1992, with a $24,900 limit, which as recently as 30 days ago had a balance transfer of $24,000 on it (hey, it’s not my fault Citi extended that at zero percent APR). This is not my definition of an “inactive card” (Citi Platium Select Dividend). Another, from 1994, with a $3,300 limit, which as recently as yesterday had a balance transfer of $3,000 on it is equally not “inactive”.
Net result? 34 years of credit history down the toilet. The transfers will be paid off by months end, the accounts will be closed, and Citi go to a hot place ending in two l’s.
Contrary to some reports, there is no interest whatsoever in appeals, waivers, trasnfers, account conversions. Spare yourself the indignity of begging and don’t bother, your cries will fall on deaf ears.
February 19th, 2010 at 12:32 pm
Believe me, All you Pundits, I do get it and am very concerned. My hope is that public backlash will prevent other companies from doing the same, though I doubt that is likely. What most will see are smaller annual fees by more companies, especially on cards that have rewards programs.
And as to appeals, Citi in particular does not seem to respond. Other credit card companies will step in to take the business Citi is losing, and hopefully, they will respect their customers more.
February 19th, 2010 at 12:43 pm
The problem with awaiting the backlash is that time is up; there will not be enough time for a groundswell of angst to take hold before people are blackmailed into trashing their FICO scores in defense of a principle which we all have been bred to assume is just (namely, that good customers do not pay annual fees).
By the time March 31 rolls around, the decision to have opted out will have been made by many. Then what happens on April 01, when Chase, Capital One, Amex, Bank of America, etc. all follow suit?
I’m personally in the position of having my oldest and third oldest cards with Citi. If Bank of America follows suit (since 1993), my FICO is toast.
Finally, to impose this “mid-stream” is perhaps permissible by their slimy legalese, it is not, however, pallatable.
Of particular note, both Citi cards from August have on their respective statements:
Membership Fee: Aug 2009 – Jul 2010 $0.00
The infamous “we reserve the right to whatever we want, whenever we want, but to make you feel good, we’ll call it an ‘agreement’” trick.
The CARD act was flawed from the beginning; it was a kickback to credit card companies in exchange for politicians to bash the companies in public.
February 19th, 2010 at 12:52 pm
You make a lot of good points, not the least of which is your assessment of the CARD Act. It is the CARD Act which has led to all the rate increases, credit limit cuts, and now, annual fees. I personally blame the politicians more than the credit card companies, as I am quite sure the credit card companies made it clear that they would do all the nasty things they’ve done if the law passed. Sure, the CARD Act will protect people in the future. But it has really hurt just about everyone who held a credit card before the laws go into effect.
February 19th, 2010 at 1:53 pm
I just canceled after recieving the letter. I opened a Amex Blue and I was given a great credit line that Citi gave me. I was a member since mid 1990′s. F citi and their 60 dollar fee.
February 19th, 2010 at 1:55 pm
Letter from Citi:
ebruary 13,2010
For your Citi Card ending in: XXXX
We’re writing to let you know about an important change we’re making to your account. Effective April 1, 2010, an annual fee of $60 is being added.
The reason we are making this change is to maintain the quality of our service amid the rising cost of doing business. However, because we value you as a customer, we wanted to give you an opportunity to have the annual fee credited back to your account.
Here’s how it works. Each year, we’ll credit the $60 fee back to your account once you have made $2,400 in purchases during that year. That comes to an average of $200 in spending a month, an amount you can reach by using your card for purchases you already make, like gas, groceries, cell phone plans or your cable bill.
As always, you have the right to opt out of this change and close your account. Please read the Notice of Change in Terms and Right to opt Out beginning on the back of this letter so you are fully aware of all your account changes. If you have questions, call 1-866-915-9425.
Sincerely,
Ken Stork
Citibank (South Dakota), N.A.
February 19th, 2010 at 1:59 pm
Thanks for sharing this Stan.
February 19th, 2010 at 3:58 pm
I had a $16,000 limit on this card and a $0 balance. I have good credit. They were probably losing money on me as I RARELY ever used it. It was my oldest card and it’s a shame I had to cancel it. But I had to opt-out on principle. When I called to cancel, I expected the typical pitch of why I should keep it. Not so! It was the shortest (and most pleasant) conversation I’ve ever had with Citi. I didn’t even have to decline the “credit monitoring service” hard-sell. My two other cards have a zero balance on them as well… so my credit utilization ratio is unchanged. It’s funny, just two years ago I was hearing how having too many credit cards was a negative because of the “potential debt”. Now it’s a negative to cancel a card? You just can’t win.
My big complaint about the credit card industry for the past few years has been all the “rewards programs.” I’ve always viewed these as scams. Just like air miles, the rules are always changing. By the time you have enough to redeem… guess what? They devalue the points or make them expire at the end of the year. Here is an idea for Citi: remove the rewards programs. the savings on overhead to manage them might cover the annual fee.
February 19th, 2010 at 4:14 pm
Jason,
I think ending rewards programs would be a bad thing for consumers. A lot of people, myself included, only use credit cards for the rewards. What banks should do is charge reasonable fees for rewards cards and offer standard cards with no fees to people who neither need nor benefit from credit card rewards.
February 19th, 2010 at 4:41 pm
Just remember, keeping eyes on the rewards only can cost you. If a typical (and there are exceptions) card will pay you an average of 1% cashback, and you keep it solely for that reason, in order to ‘cover the $60 spread’, you’ll have to spend $6,000. Given that you’re, in Citi’s case, going to receive a fee waiver after spending $2,400, you’ll still come out ahead. Or will you? Generally these programs have steadily increased the redemption threshholds, say to the point of “cannot redeem until you have reached a $50.00 plateau”, many have newly-minted “point expiration dates”, and given that they’ll be holding the $60.00 for twelve months, are you really gaining much?
Seriously, anyone who is spending a lot of money, enough to generate large chunks of credit card rewards, could probably do without them anyway.
February 19th, 2010 at 5:21 pm
From my understanding if you open another credit card with a similar credit line your credit score will not be affected. Even if it does it will only be a little bit. I would assume most people canceling are smart have close to zero balances and have great credit scores…so no harm done. Personally I’m not looking to have another load in the near future or make a huge purchase. My car is paid off, I have a manageable home loan and no debt. The smart thing to do is not spend more then you have….plain and simple for some but difficult for others to follow this rule.
FYI. I probably have closed 7 credit cards in my life time and my credit score is 800+.
February 19th, 2010 at 9:17 pm
When I received the annual fee notice from Citibank I called immediately and opted out of both my cards with them.
My score is excellent and I have absolutely no reason to contribute more money to Citibank profits.
From what I understand, Citibank did not check on customer scores, payment history, nothing – they just indiscriminately sent out out notices. Stupid. From what I hear from others – people like me with excellent credit will not pay the fees – and will cancel they cards.
The only customers left for Citibank will be those with no other choice because their credit is not good and they cannot open a new card that does not have an annual fee. I think Citibank will become the largest bank for subprime customers.
February 20th, 2010 at 11:51 am
Nancy,
You really make a good point. I’m hearing from a lot people who, like you, are intelligent, responsible credit users. You are the ideal customer. And Citi is chasing you away. They truly are losing the only solid, worthy customers they have.
February 22nd, 2010 at 12:24 pm
I too called and cancelled my credit card with citi the same day I got the letter. I had a $30,000 credit limit. I admit, it was the best card I ever had, but I’ll be damned if I pay $60 fee to these clowns. I don’t care about the impact this can have on my credit. My score is over 800 anyway.
March 1st, 2010 at 11:59 pm
It’s crazy, but I also contacted Citibank-via their online customer support site- as soon as I received the letter . And, without any remorse, they simply stated close your account if you don’t want to pay the $60. Nothing else. Just close my account! As well, I have 2 citicards with over $13k limits and zero balances. I’m not paying $120 a year in fees. I’m going to check with my local credit union and see what they have to offer. These BIG Banks can just “kiss it!”
March 2nd, 2010 at 1:36 pm
typically to a merchant it cost 1% more in transaction fee on a reward card then a basic credit card. these credit card companies don’t pay for your reward it is the merchant who does, some big companies like walmart and all negotiate better pricing from the processor thats why you only get 1/2 of the reward points or miles then other places.
It is always a regular joe who pays for these expensive programs and not your credit card company
March 3rd, 2010 at 10:18 am
I agree that some rewards cards with higher fees are unfair. While I think merchant fees are a necessary evil, it is unfair that smaller merchants carry a large portion of the burden.
March 14th, 2010 at 7:20 pm
Based on all of the posts I have read, Citi wants long-standing customers who do not use their cards frequently and who pay their balances in full to cancel their cards. The reason? Citi wants to reclaim those lines of credit, which sit largely unused and are probably quite substantial. Large financial companies like Citi do research before they make decisions like this, and based on the disinterested responses of customer service representatives to phone calls from irate customers, it is clear that the numbers of people with older accounts in good standing are not in significant enough number to adversely impact Citi’s profits if these account holders “revolt” and cancel their cards. Citi doesn’t want our business. Citi wants our credit lines back. And if we don’t cancel, then they also win; they get our money.
March 15th, 2010 at 10:10 am
Dee,
This is a great point. The Citi credit card people are looking to bring in new customers who will spend on their cards. They don’t care about losing quality customers who aren’t generating revenue. So they put a gun to their heads and said use your card or pay us a fee. As you point out, it really is a win-win for them. They either get their credit lines back or get an annual fee.
March 18th, 2010 at 4:13 pm
Hello,
Enough debate, one of friend said citi discriminately sent letters other view is they sent letter to those who are not using credit card i am in favour of first.
Ok i am using this card permanently for last 4 years for more than 2500 $ a month i am still using it i am bringing money for citi whcih they charge to those where i use their card i am paying on time now i guess they are more greedy and dictating how much i have to use card
more i think they want us to use card and forget the payment so they can make more money and make our credit bad so make more and more out of us.Don’t forget about score and don’t be panic these big giants helping themselves but putting out credit score in to jeoperdy. get rid of this card watch what other companies are doing before you apply for a new card because you never know when other gonna start fee too. we need to watch them as they are watching us.
March 18th, 2010 at 4:14 pm
Sorry in my comment i wrote 2500 $ a month actually its yr
March 30th, 2010 at 2:04 pm
Citibank refuses to let me redeem my hard earned rewards (abt.$20)before closing my credit card account. Their reason being that I did not accumulate a minimum of $50. How am I able to have enough time to have this minimum before they charge me $60 of annual fee? Calling them is a waste of time as they do not have knowledgeable or helpful customer reps. They obviously did not honor what they said in their letter:’you will lose any accumulated rewards unless you call us to redeem before your account is closed’. I am being robbed and will close my account and NEVER do business with Citibank again!(Had been a customer for 18 years and no one should dictate to me, a responsible card holder, how much I must spend on their card).
March 30th, 2010 at 2:07 pm
TL,
I ran into the same issue. I had the Dividend card and earned $29 of cash back. They make it hard to redeem the cash-you basically need to spend $5000 to get your reward.
I wouldn’t waste any time trying to fight it. The $50 redemption limit is in the card contract. Sorry I don’t have better news.
April 3rd, 2010 at 10:32 am
I too have canceled. This account was my oldest, from 1984 and it was sad for me to have to let it go, as it was my very first real card after my “Sears” card. But Citi wouldn’t budge, wouldn’t change the card to a different type, nothing. I was a bit surprised, and somewhat sad, really.
My score is very good, though I am now unemployed and so can’t get a replacement card in its stead. But just on principle, I was not going to be blackmailed by Citibank. Let’s see, you want $60 a year for a card with absolutely no benefits, rewards, or anything else? No.
The funny thing about this card was that several years ago, they sent out a solicitation for a cash loan at 3%, good until it was paid off, with no fee. They even raised the credit limit significantly, and I borrowed all of it. I invested that money and have more than doubled it. Even though the account is now closed, Citi and I will be doing business for quite awhile, as I am now making minimum payments on that incredibly cheap money.
Frankly, these banks can all go boink themselves.
April 3rd, 2010 at 2:07 pm
Since you doubled the money, I’m assuming you didn’t invest it in Citi stock a few years ago. Sorry to hear about your unemployment situation, but do keep the cheap money-I’m surprised they didn’t try to take that away from you.
May 25th, 2010 at 12:20 am
MOVE MOVE MOVE AWAY… AS CONSUMERS WE MUST TOGETHER FIGHT THESE CORPORATE BULLIES… AFTER RUNNING A HUGE HAVOC ON THE WALLSTREET AND LOST ON THEIR OWN GAMBLES… DESTROYING MANY PEOPLE’S LIFE SELLING TOXIC PRODUCTS… AND NOW THESE FINANCIAL TERRORISTS IS TAKING A HOSTAGE ON OUR CREDIT HISTORY AND DEMAND PAYMENTS FOR IT !!!???!!!??? IF WE GIVE IN TO THESE BULLIES, THEY’LL NEVER STOP THEIR INTIMIDATION. IF WE AS CONSUMERS DON’T HELP OURSELF BY BOYCOTTING ALL THEIR PRODUCTS, WHO ELSE WILL? WE KNOW THAT THE CONGRESS WON’T.
May 25th, 2010 at 7:32 pm
I have excellent credit. Always have. Citibank is giving me the run around over a balance transfer I made in Jan 2010. The promotion was for 0% for 9 months. They started charging interest after 3 months. I caught it, they removed it, and did it again the following month. When I notified them again, they said they didn’t have any records that I did a balance transfer, and the current interest rate would apply. I pulled the transfer information up on my account myself and sent it to them. Now they’re telling me they’re investigating it and I will receive a letter in writing in 10 to 15 days.
Somethings up–what is it?? Why a letter? I’m afraid they’ve done a bait and switch via small print that I am still unaware of?
May 26th, 2010 at 10:01 am
Betty,
This is really baffling. I can only assume they “accidentally” made this error, though I find that hard to believe. Plus, all the info should be right in front of them. This is sketchy behavior at best and I hope other’s don’t have the same problems.
I don’t think you were victimized by a bait and switch. I think you are getting the runaround from Citi.
July 29th, 2010 at 7:58 am
When I disagreed with the fee they closed my 23+year visa account. Ironically 2 months later they sent me an offer for a free mastercard. How stupid are they to refuse to waive a fee, close the account and them offer me a fee free card?
July 29th, 2010 at 10:12 am
Just goes to show you how disorganized these big banks are. One day they want to extort a fee from you, the next day they want to give you a free card with 0% rate.
August 17th, 2010 at 6:43 am
Used balance transfer 0% till 8/2011. Transfered $8,500. Citibank would not honor. Says it was marketting error. Am still get balance offers for 0% in mail and email, and this was after I talked to them. I have two open accts. 24K and 12K limit. Only have 4K at low interest on 24K card. Do they really have a friggin clue. I told them they should honor their offer. I explained we bailed them out and the current cost of money is cheap. It was like talking to the wall.