Consumer complaint received 2018-06-11
Company: CITIBANK, N.A.
State: NY
Product: Credit card or prepaid card
Sub-product: General-purpose credit card or charge card
Issue: Fees or interest
Sub-issue: Problem with fees

Complaint:
Dear CFPB, I have been a loyal XXXX XXXX XXXX   cardholder and would like to report unethical interest charge method and abuse of payment hierarchy rules.

My issue begins with the complication that I have 3 different plans in one account.

On my XX/XX/XXXX statement I had a 0 % purchase offer that end on XX/XX/XXXX and a 0 % balance transfer offer which ends in XX/XX/XXXX. For the XX/XX/XXXX statement as both my plans are active I see a {$10000.00} on my BT plan and {$1200.00} on my purchase plan. Due to the fact that I am on 0 %, auto-pay setup for minimum due payment satisfied all plans and no interest was charged.

On my XX/XX/XXXX statement I see a {$0.00} interest charged due to my annual fee of {$95.00}. I do understand that some issuers charge interest on annual fees but, I did not know that I was a revolver and did not have grace in my plan as I was hit with an interest fee on the same day the annual fee was posted. One can argue that annual fee are not purchase hence this is another subset of plan bucket but the statement clearly states Purchase- Standard Purchase. Can issuers disguise a fee as a purchase by adding it into purchase plan bucket to gain interest on non-purchases when customers are on a 0 % APR? Also Isn't there a need for issuers to give customer heads up about this? No information was provided that 0 % on purchase/BT doesn't in fact mean " grace '' and that any other " fees '' can be charged interest at the day of posting even on 0 % period. For this case, this fee was charged not for wrongdoings ( i.e late fee/cash advance ) This seems like a sneaky method that Citi does to capture on the {$0.00} of fee by offering customer 0 % APR plans to lure customer to not pay in " interest-free '' period and catch on sneaky fees like this.

Citi did waive {$0.00} on this but had to call again to waive the trailing interest of {$1.00} on the annual fee. At this point I had {$10000.00} on my BT Plan and roughly {$2300.00} on my 0 % Purchase and theoretically not on Grace according to Citi.

As mentioned before, my 0 % purchase plan was going to end on XX/XX/XXXX so I proactively made enough payment ( {$10000.00} ) to avoid paying any interest. All in all I am on 0 % on my BT plan and such substantial payment would be enough to not be charged interest. But as you can expect, Citi does not do anything in favor of the customer. Because my payment of {$10000.00} was made BEFORE XX/XX/XXXX this payment was allocated according to payment hierarchy rule-new purchase that are on 19.24 % from XX/XX/XXXX-XX/XX/XXXX ( Cycle close date ) but the remaining amount was allocated to my BT plan which has 1 more year of 0 % vs. all to my 0 % purchase which was ending in 6 days after payment. Not sure what the regulation is on payment hierarchy when the APR is the same in both plans and how payment allocation works but, in customer friendliness doesnt it make sense for your payment allocation to be applied to the plan that is ending the soonest rather than the latest? What is the point of payment hierarchy if banks can do whatever they want on same APR plans? In this case I shouldnt have done Citi a favor by paying my bill early and customer should never ever pay my bill early as you can be penalized. If I waited for my promo to end and made the {$10000.00} payment on my due date XX/XX/XXXX, this wouldnt have happened at all. A case when paying early hurts the customer should never be allowed. Citi made some money by getting my {$10000.00} early and saving on cost of funds, liquidity allocation etc and charged interest on customers. Never ever customer first After explaining all this to the customer agent and getting the interest waived. I asked a question on how much of my XX/XX/XXXX statement balance of {$3700.00} is under 0 % balance transfer? The agent told me that {$2900.00} are in my BT plan so any payment of {$800.00} would satisfy my payment and would be not be charged interest. I then made a payment of {$850.00} on XX/XX/XXXX and auto-pay of min due of {$56.00} ( Total of {$900.00} ) but dont understand why I am getting a {$8.00} interest charged on a {$510.00} balance subject to interest charge. I have talked to multiple agents and none could explain how my {$900.00} payment was allocated and what sort of payment hierarchy rule they have used. What sort of calculation is need for the statement reflect {$510.00} balance subject to interest? I know credit cards but dont understand what method of payment allocation and daily accrual method Citi is using. And agents continuously avoided any valid explanation and I had to ask numerous times on how much of my statement balance is on 0 % BT plan. Finally they have waived my fee and told me all my balance excluding new purchases are in 0 % BT but, well see next month and see. This seems to be some fraud activity that Citi is pulling off in allocating my payments and would be great if CFPB is investigate if Citi is performing such activities to all of their credit card customers. I am pretty sure not many people can catch this nor easy to explain what is causing this.

Can somebody investigate or Citi explain what has exactly happened?

Company public response: Company has responded to the consumer and the CFPB and chooses not to provide a public response
Company response to consumer: Closed with explanation