Here’s one way for banks to compensate for their losses during the subprime lending debacle: screw their other customers. GRS reader Morydd shared a scary story in the discussion forums. His wife has a student loan through Citibank, which this month decided to charge a retro-active late fee without any explanation. Here’s Morydd’s tale (as originally posted at his blog):

When I went to check the statement on my wife’s student loan through Citibank for November, I noticed a late fee listed. As we signed up to pay via direct debit for the interest rate deduction, we get no paper statements. I checked my records, and our last payment had been processed for the full amount, on the due date.

I asked my wife to call and find out why we were being charged a late fee. The representative told her that it was to correct an error from 2005. There is no explanation on the site, and when my wife asked to speak to a supervisor, the supervisor told her that there were no plans to notify people being charged these fees. My wife had to specifically request that a letter be sent detailing these fees.

Rather than the $175 dollars we usually pay each month, the automatic deduction this month will be $225. We have the funds available to cover this difference, but many people with tight budgets may not. The only option to avoid this jump is to cancel the automatic payment (and lose the interest rate reduction). Of course, this doesn’t help if they are going to report you as not paid-in-full or as delinquent to the Credit Bureaus.

It seems very shady that they would suddenly up your payment, charge late fees from two years ago, and not provide any notification. From what my wife understood from her conversation with the CSR, this is something they’ve done with loans across the board, including some which may have been listed as paid-in-full.

Morydd forwarded a couple of visual aids. First, his statement from October:

Next, his statement from November:

This is another example of why it’s important to always check your statements. Banks (and other corporate giants) can make huge sums through inconspicuous charges on millions of bills. Even if this fee is legitimate — and it may be — it’s disconcerting that a bank can just levy the charge without notice or explanation.

If you have a loan through Citibank, pay close attention to your statement this month. Be sure to speak up if something doesn’t look right.

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