How Does Citi Get Away with Charging This Interest?

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Citibank Australia

• 

  Hybroid on 12/08/2023 - 18:11

  +4

  interest is charged on the full statement balance ($20,000) and doesn't count the repayment I've already made.

  Did you pay before or after the closing balance date? Makes sense if after, that's how they make money off giving you credit…

  • 

    acinod on 12/08/2023 - 18:44

    +1

    Before the balance date which makes it seem quite unreasonable…

  • 

    FreeUyghur on 13/08/2023 - 12:56

    +1

    CLOSE THE ACC

• 

  bobbified on 12/08/2023 - 18:12

  +4

  The T&Cs for your card (the ones you agreed to when signing up) will explain how the interest is calculated.

• 

  Baghern on 12/08/2023 - 18:28

  interesting, is the Closing balance date the end of the month or has everyone got a separate date

  What confuse me about this is Statements are 30 days, but the interest free period is suppose to be 40 days

  I've read the T&C, doesnt make much sense

  • 

    jjjaar on 12/08/2023 - 18:31

    +13

    Interest free period is always “UP TO” x number of days.

    Which means that if you transact on 1 August and your bill comes in on 1 September, which is due on 15 September, you’ve had 45 days.

    But if you transact on 31 August, it’s also in the same bill, and also due on 15 September, so only 15 days.

    The number of people that don’t know this is concerning, and people should really not be opening credit cards if they are still confused with how credit cards work.

    • 

      Baghern on 12/08/2023 - 18:35

      oh thats fine, how I understand it

      Op's description freaked me out just now

      and correction 44days not 40 days I typed previously

• 

  jjjaar on 12/08/2023 - 18:29

  +6

  had an outstanding balance of $20,000.

  but

  thought I would only pay $19,995.

  You thought wrong. Your outstanding balance was $20,000. You didn’t pay it all. You are charged interest for not paying off your balance in full.

  • 

    Ramrunner on 14/08/2023 - 17:07

    This. Pay the amount shown. Even if your account was $5 in credit it would hurt less than copping the interest on $20k for sure. Why cut it so fine?

• 

  wots on 12/08/2023 - 18:36

  Fully understand why you're annoyed. If they won't refund you on the phone then make it a formal complaint. Tell them you will take your banking elsewhere. More chance of succes if you have other accounts with them.

• 

  Hardlyworkin on 12/08/2023 - 18:57

  +4

  Very shiti

• 

  redfox1200 on 12/08/2023 - 18:57

  was the 20k balance a cash advance?

• 

  Malik Nasser on 12/08/2023 - 19:10

  +9

  This doesn't make any sense to me.
  So you had $20k outstanding at the end of your statement period?
  You received a refund of $5 from a merchant that you previously used, and received that refund before the 'payment due date' of your credit card?
  As such the balance outstanding should have only been $19,995 that needed to be paid by the payment due date?
  As long as the full $20k was paid by the payment due date, then you should be fine. It doesn't matter where the funds come from, as long as the full balance is paid in full.
  Why would the refund of $5 not count as part of the repayment? It was received within the payment window right? (Unless the $5 refund was received before the end of the credit card statement period, so the actual balance outstanding at the end of the statement period already had accounted for the $5 refund, and you did in fact need to pay an additional $20k, and not just $19,995 - this is the only thing I can think of).
  I have done this numerous times with my CBA credit card with no issues.

  • 

    loulou1 on 12/08/2023 - 19:15

    +1

    I wonder if perhaps the purchase that was associated with the $5 refund was made after the statement date. If this is the case then I think charging interest is entirely reasonable.
    If the refund related to a purchase that formed part of the statement, then the charging of interest is unreasonable.

    • 

      Malik Nasser on 12/08/2023 - 19:18

      +1

      Yes exactly. It is all based on timing. It seems possible that OP may have made a mistake on the timing of payments in relation to the statement period and pay by date.
      I think it is unlikely that Citi made the mistake as it should all be automated (otherwise there would be lots of people being hit with this same issue). But then again, anything is possible.

      • 

        dcep on 12/08/2023 - 21:10

        But Citi charge OP interest on whole $20k despite already paid $19,995 by the due date with only $5 outstanding balance.

        That's not normal ?

        • 

          Malik Nasser on 12/08/2023 - 21:28

          +2

          @dcep: Yes that is normal. If you don't pay it off in full, you will get charged for the full amount, not just the outstanding amount.
          This is one of the reason credit cards can be really bad.
          In short, always make sure you pay off the full amount each month.
          Banks really know how to screw people over, especially if you don't read the fine print (T&C's).

        • 

          randomusername2017 on 12/08/2023 - 22:46

          +3

          @dcep: Need to pay the statement balance in full or the interest free period does not apply. It's calculated daily on the previous transactions and charged next cycle.

  • 

    acinod on 13/08/2023 - 11:20

    To clarify:
    25 Jun - $20,000 spent using Citi PayAll
    08 Jul - statement received with closing balance of $20,000 due 21 Jul
    11 Jul - $5 refund received from a payment several months ago
    20 Jul - $19,995 paid - outstanding balance is now 0
    07 Aug - interest charged after 44 days (few hundred dollars)

    So how I understand this is the refund didn't count towards me fully repaying off the $20k and so I get charged the full amount of interest (which had been accruing on the $20k) at the end of the 44 days.

    Pretty ridiculous and they said they would get a supervisor to call me back. Hopefully I can get it waived but definitely lesson learnt.

    • 

      Malik Nasser on 13/08/2023 - 16:21

      +1

      Well based on your clarification, it looks like a Citi stuff-up from my understanding.
      Definitely speak with the supervisor to find out why interest was charged.
      The full $20k outstanding was repaid, with $0 balance by the 21 Jul.
      It should not matter that the $5 was a refund (they got their money back, so case closed).
      As far as I am concerned, the closing balance was $20k at the end of the statement period of 08 Jul, and $20k was repaid between the statement issue and the due date of 21 Jul.
      They are really going to need to come up with a creative response to be able to justify charging interest in this case.
      Good luck.

      • 

        randomusername2017 on 13/08/2023 - 16:42

        +2

        Refund after the statement issue date is an adjusted transaction carried forward, not a repayment.
        Balance not paid in full, well within the t&c to charge interest.

        • 

          Malik Nasser on 13/08/2023 - 22:18

          +1

          @randomusername2017: So if I made a $20k purchase, then between the statement closing date and the payment due date I was refunded the full $20k, I would still have to make a $20k payment by the due date?
          So my balance will then be $20k in credit?
          What then happens with my $20k credit? Does it carry forward, or can I withdraw it?

          • 

            randomusername2017 on 13/08/2023 - 22:35

            +1

            @Malik Nasser: $5/$20k same process applies.
            Transfer the excess funds once the payment is applied to statement closing balance.
            In future try and schedule the refund prior to statement issue.

  • 

    bamzero on 13/08/2023 - 14:10

    +1

    CBA does credit refunds towards the outstanding balance but in the app it's clearly shown, statement balance and amount remaining to pay.

    Not sure about other banks though, but I seem to remember this exact scenario with another bank and the same thing, that refunds weren't credited against the balance. Not 100% on that though.

    However I don't understand if the remaining balance was $5 why interest should be so much. It should only be on the $5 if the $19995 was paid on time.

    • 

      CyberMurning on 13/08/2023 - 14:23

      But you have borrowed that 20k for many many days and didnt pay if full therefore you dont get free interest on that amount.

      • 

        bamzero on 13/08/2023 - 16:14

        Surely not? If that's how they play it I'd drop that bank. For example, CBA states here interest is charged on the unpaid balance after the interest free period.

        However reading the Citibank T&Cs its not as clearly written but it does say
        "The daily interest calculation will commence the day after that payment due date.
        To calculate that interest, we multiply the applicable daily percentage rate by the daily unpaid balance"

        I'll admit thought that I'm not familiar with PayAll, not sure if this makes the difference.

    • 

      kanad on 13/08/2023 - 20:51

      AMEX too and I thought all banks would do this.
      OP don't give up easily. Credit cards interest rules are highly regulated.

• 

  Drakesy on 12/08/2023 - 19:13

  +1

  I think you paid outside the 45 day or whatever it is interest free period.

• 

  Ash-Say on 12/08/2023 - 19:13

  I have done this few times with Amex and never got chsrged any interest.

• 

  randomusername2017 on 12/08/2023 - 19:48

  The interest free period applies when you pay your full closing balance

  On the assumption the $20k outstanding balance you mention was your statement closing balance, you forgo the interest free period by only paying $1995 and wear the accrued daily charges.
  Common across all Citi products.

  For the sake of $5 ¯_(ツ)_/¯

  Refund will be processed next cycle.

• 

  CyberMurning on 12/08/2023 - 20:12

  Questiin please…
  On my cc webpage i see

  Last statement issued date:03/08/2023
  Minimum Payment Due:AUD 0.00
  Minimum Payment Due Date:28/08/2023

  Thats mean my statement date is 3rd?
  And to avoid issue like this post, by 28th i need to make sure balance is zero?

  • 

    randomusername2017 on 12/08/2023 - 20:48

    +1

    need to make sure balance is zero?

    Just pay the statement balance in full by the due date. Any further transactions will be on the next statement.

• 

  burningrage on 12/08/2023 - 20:45

  Generally speaking, a refund does not count as payment. If this happens to me (it did a number of times), I need to make sure the refund is IN the statement so my closing balance would be $19,995. Barring that, your closing balance is ALWAYS what you need to pay.

  Having said that, I don't necessary agree with that line of reasoning because imagine if you buy something for $20,000 1 day before the statement is issued, and then a few days later, you received a statement saying you owe $20,000 and THEN afterwards you say, exercise your cooling off period, and received a refund of $20,000, then it can be argued that you no longer have to pay $20,000 closing balance and it would be stupid to pay $20,000 when your LIVE balance is already zero.

  You should attempt to argue back with Citibank based on this principle.

  On the second part of your question, shouldn't your repayment be taken into account before interest in calculated? I don't think if T&C has changed but in my experience having credit cards, if you don't pay the statement balance in full (ie NOT just minimum amount), the interest is calculated FROM the date you spend the expenses. In other words, you lost the interest free entitlement entirely and interest is calculated from day 1 of that 45 days "interest-free" period. $2k interest is the reflection of that backward calculation.

• 

  Hydralyte on 12/08/2023 - 21:37

  +1

  Always pay your statement balance in full regardless of what refunds or credits are applied to your account.

• 

  f23lda on 12/08/2023 - 21:45

  +3

  On the one hand, it's rubbish service. On the other, it's a fantastic example of why care must be taken in interacting with a credit card. They don't make anything if they don't rip someone off :-/

• 

  daft009 on 12/08/2023 - 22:05

  You'll likely have an interest charge next month too I would think.

  Yes interest is charged on the whole balance.

  Ask nicely and they might wave it once depending on how long you've had the card etc

• 

  Bargainitis on 13/08/2023 - 07:17

  Have had this happened to me with prestige before.

  Usually the chronological event is:

  • get statement showing $20K payable due in X days
  • a refund happens after the above statement issuance say $1K
  • feels like I should only pay $19K on due date

  When it happened to me, it was also a small amount so I called and they waived it.

  I would just try again, press a bit harder especially if you have never had this happen before. Keep escalating it until you get a supervisor.

  It’s a nonsense charge

• 

  jakka on 13/08/2023 - 07:26

  Was any of the the $20k a balance transfer?

• 

  brad1-8tsi on 13/08/2023 - 07:35

  +1

  The interest is as per the T&Cs you agreed to.

  You've stuffed up your timing. They are particularly harsh if there are any cash advances.

  I've had this issue when Citi owned Coles Mastercard (still do??). I spoke to them and asked for them to waive the fee/interest as a one-off. They did without issue. I had a few problems like this over 20+ years that were basically my fault and they were always understanding.

  Always pay the "balance owing" on the statement. If you know a refund is due then look on that as a bonus for next month.

• 

  capslock janitor on 13/08/2023 - 12:37

  you literally gotta pay the full Closing statement balance regardless ime

  do they offer refund/cash out on credit balance/överpayment" ?

• 

  Outrageous on 13/08/2023 - 15:37

  This is what pays for all the payall points they are handing out.

• 

  Tea-Aholic on 13/08/2023 - 17:55

  This is my experience as a Citi card holder using PayAll, but have also had many credit cards:

  1. Refunds almost always don't count towards minimum repayments or towards the closing balance. Read the T&C's of your card. Don't assume.

  2. However, in the OP's situation where a repayment is less than the closing balance, but brings the balance to $0, there shouldn't be interest charged.

  For example there was a HSBC deal with a $400 cash back with $3,000 spend. If I spent $3,000 and got a statement with a closing balance of $3,000, and between the time when the statement was generated and its due date, I got the cash back of $400, my balance would be -$2,600. If I don't make any additional transactions on the account and pay $2,600 to bring the balance to $0 it was fine. I wouldn't make sense for me to pay $3,000 and be in $400 credit before I wanted to close the account. Also, the bank can't charge me interest on a balance of $0.

  3. I would expect if point 2 didn't apply to the OP, they should only be charged interest on $5 not $20,000.
• 

  Specialist Diaz on 13/08/2023 - 18:25

  Commonwealth definitely treat refunds as repayments. Could see it in the app that the refund has reduced the amount outstanding for that statement.

• 

  mshanann on 13/08/2023 - 18:33

  I’ve stuffed up a couple of times with Amex and they have always reversed the charge after a phone call. If Citi don’t, I’d close the account on principle, tell them to google the ozbargain discussion about how they treated a customer and the warning to others. $5 difference on $20,000 payment represents .025%

  • 

    benwaffle on 13/08/2023 - 19:03

    @acinod won't close the account because then they lose the ability to do their monthly 20k PayAll transactions (and the associated reward points)

• 

  p1 ama on 13/08/2023 - 19:03

  Basically, Citi is doing what I would have expected in this situation.

  The statement balance is $20,000 - you need to pay off the entire statement balance, or you will accrue interest on the entire balance. The $5 refund was received after the statement date, therefore, has no bearing on the statement that you received. In other words, you should not treat your statement balance as something that can change between the statement date and when you pay it.

  Any transactions, whether debits or credits, occurring after the statement date will appear on the next statement, so is irrelevant to this one. E.g., if you make a purchase, or if you receive a refund after the statement date, it doesn't change how much you need to pay.

  That being said, in my experience, both using personal and work credit cards, I've basically found that Citi can be very difficult to deal with. I've generally had very positive experiences with AMEX, and okay-ish experiences with the Big4 banks.

• 

  LFO on 13/08/2023 - 19:55

  "So how I understand this is the refund didn't count towards me fully repaying off the …"

  From memory almost all credit card providers have the same rule: refunds are not payments.

  Never charged the astronomical amount you suffer but just a few dollars (with ANZ). Super careful since then.

• 

  pebee47 on 13/08/2023 - 20:39

  I always pay my CC so I am $1 in credit.

• 

  TheGuru on 14/08/2023 - 10:16

  AMEX, NAB includes refunds as a payment.

  CBA will smack you like Citi, with interest for the whole statement - which sucks. I believe NAB charges interest only for the unpaid amount

  The rules are different bank to bank

• 

  omguleh on 14/08/2023 - 11:28

  Bit crappy from Citibank, I miscalculated a payment before on my Westpac card and the interest was only calculated on the balance outstanding at the time interest was calculated, not the statement balance. Ended up only being $10-15.

• 

  CyberMurning on 14/08/2023 - 11:44

  lol i just checked my citi and i also got a line says
  INTEREST CHARGED - RETAIL - $ 40

  • 

    CyberMurning on 14/08/2023 - 18:10

    update: just did a chat and they reverse it :D

• 

  trashcan on 14/08/2023 - 18:39

  The intrest charged by Citibank violates their owns terms and conditions and I would lodge a complaint with AFCA

  "Once an interest free period starts, it continues until
  you fail to pay by a payment due date the closing
  balance from the last statement of account (excluding
  any Fixed Payment Option balance which isn’t due for
  payment by that payment due date). The daily interest
  calculation will commence the day after that payment
  due date."

  Assuming OP had a zero balance on or before the payment due date, the daily interst should be calculated on the balance after the payment due date which on a zero balance would be zero.

  • 

    benwaffle on 15/08/2023 - 00:21

    OP failed to pay the closing balance from the last statement of account. He was $5 short
    The refund was not a payment

    • 

      trashcan on 15/08/2023 - 00:31

      I get that but as per their terms and condition

      "The daily interest
      calculation will commence the day after that payment
      due date."

      Assuming OP had a zero balance on or before the payment due date, the daily interst should be calculated on the balance after the payment due date which on a zero balance would be zero.

      • 

        CyberMurning on 15/08/2023 - 08:28

        OP see zero but it was not actually zero because the $5 was not a payment he didnt pay full, balance wasnt zero. if he paid full 20k then yes OP had zero balance.
        thats what i understand

        • 

          MrGarciaA on 15/08/2023 - 11:47

          @CyberMurning: What OP saw was the current balance not the statement balance. Citi's T&Cs are very clear: "it continues until you fail to pay by a payment due date the closing balance from the last statement of account". i.e. you must pay the entire figure in the big box at the top of your statement to avoid interest.

          Literally means that if the statement issued says you owe $20k then tomorrow you get a $40k refund, the current balance would show $20k credit, but you should still be paying $20k as per your statement balance as the $40k would count towards the next statement period.

          Yes, it is entirely impractical and redundant, but as it's been mentioned numerous times on this thread, it's not an atypical practice by the banks.

          This is also why I usually always pay my closing statement balance in full the day I receive my statement. Yea I miss out on a few days of interest, but it ensures I minimise the risk of these things happening.

          • 

            CyberMurning on 15/08/2023 - 11:50

            @MrGarciaA: yup i'll watch out mine more carefully as well from now. lucky i dont use my citi card except for one thing one amount so it is easy now. not like before.

      • 

        randomusername2017 on 15/08/2023 - 10:02

        The daily interest
        calculation will commence the day after that payment
        due date.

        Yes… daily interest calculated on statement balance from day 1, given failure to pay balance in full on due date, not outstanding live balance.

        • 

          CyberMurning on 15/08/2023 - 10:10

          +1

          @randomusername2017: yes … like i said on the top, we borrowed x from say 50 days ago, we got free interest period IF we pay in full. if not, doesnt matter paying half or more, we will pay interests for 50 days of the full if we dont pay in full on due date.

          • 

            randomusername2017 on 15/08/2023 - 10:20

            @CyberMurning: Given the amounts involved, hopefully OP has a good chance at waiver.

            • 

              CyberMurning on 15/08/2023 - 10:37

              @randomusername2017: true i just go like as i have been citi customer for xx years (i keep record when i opened every single CC and when closing)
              works every time.

• 

  capslock on 15/08/2023 - 19:16

  Assuming you want to continue doing free Payalls going forward then you can't really push this too far in case it backfires. I say just charge it to experience.

• 

  Mr Joker on 19/08/2023 - 23:51

  -1

  So i have set up citi payall from 7th August 2023 to 7th July 2025.

  If i wanted to set up the next payall feature between 2025-2027 I shoud set it up as August 2025 to July 2027? I read above from similar people that this is the way that should be done? Could anyone confirm that has successfully set up for 10 years? :)

• 

  acinod on 13/09/2023 - 18:40

  +1

  So….it's been a month since I was charged interest and to my utter surprise, I was charged a similar amount of interest a second time!

  Last month, I immediately paid back the $5 plus interest charged but turns out I had to pay off next month's statement before interest stops accruing.

  I did managed to get a partial refund of the previous interest charged so when I contacted Citi again, they said no more refunds since I already received one in the past.

  Absolutely ridiculous but I've learnt a lot about how interest works (at least with Citi). Basically every transaction can be thought of as a sink, interest is water from the tap and the interest free period (44 days for Citi) is the sink plug. The sink starts with the tap on and the goal is to turn off the tap while the sink plug is still there so that the water will clear itself. The only way to turn off the tap is to pay ALL outstanding statements in full. I've made 2 mistakes.

  Mistake 1 - first statement was $5 short because the $5 refund doesn't count. This meant the tap was still on and the water did not clear when the sink plug was gone.

  Mistake 2 - I paid off the first statement in full but then the second statement I thought was independent but it's not. The water doesn't turn off until all statements are paid in full. As a result, I was still accruing interest and since the sink plug is gone, I'm liable for interest every day that I haven't paid off my statement in full.

  I've asked a supervisor to call me back so hopefully I get something back but highly doubt it…

  • 

    Homr on 16/01/2024 - 19:00

    Hi there, did you get an update?

    I experienced a similar thing when I paid off my balance in full but got slugged with $104 interest charge

  • 

    Ramrunner on 17/01/2024 - 09:19

    Mate it's standard practice:

    "I've learnt a lot about how interest works (at least with Citi)"

    It's that way way with ANZ and CBA who I bank with also.

    Learn your lesson, move on, and pay your REQUIRED balance in full every month and you will have no issues.

    That is the way.