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Beware of Citibank’s Retroactive Late Fee Print
Tuesday, 6th November 2007 (by J.D.)This article is about News, Odds and Ends, Real-Life
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.
November 6th, 2007 at 8:46 pm
Isn’t there a statute of limitations on this kind of thing? This is absurd. I’d be incredibly angry.
November 6th, 2007 at 8:48 pm
Bastards!
November 6th, 2007 at 9:11 pm
Welcome to customer service in the twilight of the banking industry.
While the subprime nonsense is all over the headlines now, it’s not the real issue. The real issue - in the short term - is the inversion of the yield curve. The old banking model is to borrow at low interest on short term money (customers’ deposit accounts and CDs, fed funds, etc.) and lend at high interest on long term money (mortgages, commercial loans, car loans), and keep the difference. Since the yield curve has been flat or inverted for the last couple of years, they can’t make money on the old model, because there’s no rate difference between short- and long-term money. How do they make it up? By nickel and diming their customers to death with ridiculous fees that most people don’t push back about. As one example, banking insiders know that NSF fees on bounced checks aren’t for cost recovery; they are planned as a revenue item during budgeting seas
The real issue in the long run is that traditional banking is an obsolete business, and they only get away with this stuff because we’re soooo heavily in debt that we can’t afford to shake them loose just yet. As soon as everyone realizes that we already have all we need (AND much of what we want), we’ll realize how little we need debt or banks, and they won’t have the power to do this to us anymore.
Thanks for bringing this up, JD. People should get mad as hell about this.
November 7th, 2007 at 12:15 am
That’s right. We’re mad as hell and won’t take it anymore. Fees for this, fees for that… f** em.
November 7th, 2007 at 12:17 am
Just read an article from the NY Times regarding soething similar - fees charged on mortgages for those in bankruptcy. The article details how many of these fees and even the balance supposedly due on the mortgage itself is oftentimes severely miscalculated. The fees are also sometimes in direct confliuct with State law. And this is not just from shady Countrywide but also such upstanding companies such as Wells Fargo. They are counting on the ignorance and passivity of their customers. And just like this blog entry shows, they also are don’t give any documentation unless requested. How is this allowed to go on? I smell class action suits.
November 7th, 2007 at 2:58 am
I noticed recently on a credit card statement that in the terms it said ‘We can increase your rate at our discretion.’ It was there, and I bet dollars to doughnuts, they will increase your rate because it’s Wednesday.
And that was a Bank of America statement (the edit feature is great!
November 7th, 2007 at 4:37 am
Morydd simply needs to contact a manager at Citibank and ask that this late charge be removed. If Morydd is a good customer, Citi will remove it and say something like “next time we will not be able to do you this one time courtesy”. Persistence pays, keep at it and you should have the late fee charge removed and credited back shortly. Those who do not ask, will not receive.
November 7th, 2007 at 4:54 am
Another reason not to do business with Citibank, but I guess Morydd is stuck for now since its a studen loan. I would totally fight this, a late fee two years later….. were you even late 2 years ago, how would you know, ugh!! This makes me soooo mad!!
November 7th, 2007 at 5:34 am
This is the best reason I can find to get and stay out of debt. I don’t even worry about this stuff since we paid off everything but the house. I have formed a great relationship with the manager at my local branch. If I ever have a problem she takes care of it for me.
November 7th, 2007 at 5:38 am
I’m a bit confused. Why would a bank - which we know is greedy - not have levied the late fee back when the late payment happened? wouldn’t they want their late fee right away?
I guess I would write to the bank and ask for evidence of the late payment as well as the policy regarding late fees that existed at the time the payment was late. I mean are they charging you the current fee for a late payment that happened two years ago - were the fees lower then? If so, they should charge you, if at all, the fee that existed at the time.
If there is a statute of limitations, i have no doubt it more than 2 years.
November 7th, 2007 at 5:42 am
Citibank has issues.
My husband and I recently spent 4 weeks dealing with a situation where he had scheduled in advance a ($4,000 - lots of plane tickets!) payment for a credit card and then been notified that autopay was now in place, so he canceled the payment that he’d set up by hand. He received an email confirmation that the scheduled payment had been successfully canceled and went on his way.
A week later, the autopay kicked in - and so did his automatic payment, meaning that citibank deducted $8,000 from our checking account in one day, rather than the $4,000 we’d been expecting - overdrawing the account by $2,000.
And this was just the beginning - after 4 different phone calls, each where he was promised the money would be refunded that day, the next day, two days later, within the week, we still didn’t have the money 2 weeks later, and had to throw a fit with a manager, who finally mentioned that actually, all the reps who’d promised it was about to be taken care of didn’t even have the authority to restore the money. Why were we repeatedly lied to? No answer.
Two weeks is a long time to be out $4,000!
November 7th, 2007 at 5:59 am
I canceled my citibank account. My friend canceled her account after reading this also. I also recently canceled my bank of america account too. I moved everything over to ING Direct, and I can only say good things about my experience thus far.
It’s time we show these banks that they can’t get away with this type of treatment.
Interestingly enough — With Citibank, I’d always be transferred to some call center in India, but with ING, I always receive a friendly American customer rep - very helpful and very respectful. Banks need to remember that customer service is also marketing!
November 7th, 2007 at 6:14 am
Call your attorney general and complain.
November 7th, 2007 at 6:20 am
Wow! When I read stories like this it makes me more and more motivated to work hard at getting out of debt so these banks will be out of my life.
Though it seems they will also work harder to find ways back into my life…
November 7th, 2007 at 6:30 am
As a former traditional bank employee who worked in both operations (where some of my coworkers performed their duties in a less than capable manner) and internal auditing, I can totally see this happenning. Someone forgets to charge the fees for a few days, weeks or months, and it doesn’t get picked up until an internal audit sometime later. But I agree with JimmyDaGeek, call your AG and your local consumer reporter.
On a related note, I think I am going to have to call my mortgage company SunTrust, to find out exactly why they receive my payments on one day but don’t credit my mortgage until the next day. I don’t believe I should have to provide them with a 1-day float and pay interest on it. Hmmm… I think I may be making a call to my AG.
November 7th, 2007 at 6:37 am
Earlier this year, the company who issued my mortgage (hereafter Company A) tried to claim late fees and interest on a mortgage they had sold nearly a year earlier.
Not. a. word. for 10 months, then a call from a collections agency. Company A wouldn’t speak to us, only through the collections group. Those yahoos would never send us proper verification (we did receive someone else’s info though)
It boiled down to this:
1) we received a letter that our loan had been sold from both Company A and Company B
2) Thinking nothing of that (it happens pretty frequently), we happily sent our payments to Company B one month before the technical sale date, but otherwise on time.
3) sale of the mortgage proceeds, we get a letter stating “You are hereby
notified that the servicing of your mortgage loan, that is, the right
to collect payments from you is being assigned, sold, or transfered
from Company A to Company B…”
4) 9 months later, we get turned into the most threatening, nastiest collections agency Company A could find and hear about it for the first time by phone
5) Mean, Nasty, & Co learned that threatening me and/or making my wife cry is not a good way to collect funds. They were turned into my state consumer protection group and I finally convinced them that since Company A had sold the note that we were under no further obligation to them. Company A’s beef was with Company B.
6) that was the last we heard of it. I think Company A was fishing and Mean, Nasty, & Co. figured they already had more invested in the claim than they would earn in commission.
Moral of the story: always keep bits of paper that accompany your accounts, and never pay any money to an old servicer of your mortgage. They sell ALL of it to the new servicer and should be due nothing at the time of the sale. If they are, their path to resolution is with the new servicer, not you. That won’t stop them from trying, though.
That’ll teach me to save 1/8% on the APR…sheesh.
November 7th, 2007 at 6:59 am
I have a Citibank Student Loan and noticed a another scam. All of the sudden I automatically stopped receiving a paper bill. At the time I relied on paper bills to keep track of what needs to be paid. It never got in my pipeline and never was paid. And a late fee occurred.
When I realized I hadn’t made a payment, I went online to check the total due and pay the bill. They required 5 security questions. I forgot one question and my online account was locked. I had to call to have my account reinstated. They purposefully made it very difficult to pay my bill on time.
And then they proceeded to ask me why I hadn’t paid on time. “Did you lose your job?” the rep asked. I said “No, you never sent me a Bill”. “OK”, he replied. “No it’s not OK”.
This is a scam.
It’s a win-win for the bank. If the customer does not act, they will be charged late fees and don’t have the cost of sending a paper bill.
November 7th, 2007 at 7:05 am
Wow. Are you keeping your statements from 7 years back?
I don’t see how they can assess late fees for loans that were paid in full. When you pay a student loan off, you typically get your promissory note back stamped ‘paid in full’. That should be more than enough evidence to dispute any charges on a closed account. OF course, you would have to tell citibank to F– off, and have them report you to the agencies to dispute it like that, so maybe its better to just pay the $40.
I really feel for you though. I usually check all of my financials at least once a week. I think after reading this i’m going to up that to 2x a week.
November 7th, 2007 at 7:08 am
Citibank is showing its lack of class….I recently cancelled my card with the final payment and a written letter. They refused to close my account and charged another $2.22 in finance charges. I then paid that, and again asked for my account to be closed. (I saw that the yearly fee was coming up the next month, and knew they would try to keep my account open so they could collect the fee!). The next month I received the statement, and guess what???? Still open. they then proceeded to attempt to add late charges, the next year’s fee, and more interest to a card I had not used in 6 months!!! I finally got the fees removed and the card closed…..but beware……they are sticking it to their customers!!!!
November 7th, 2007 at 7:08 am
Reminds me of the time a hospital threw me straight into collections — no bill mailed, no phone call, nothing. Poof, straight to the agencies.
How can they get away with it? Simple. They have paperwork departments; you have you. The relative impact of you fighting a wrong charge — any kind of thing that requires administrative pursuit — is tiny for them and enormous for you.
November 7th, 2007 at 7:15 am
I had a loan with citibank once, I always got my payments in on time except one which because of a job switch I had to wait an additional 2 weeks for my by weekly paycheck. I didn’t think this was possible but after one late payment my interest rate jumped to 35%. My monthly payments went from $150 a month to over $500. It completely messed everything up because I couldn’t afford the new payments and I ended up paying that loan 10 times over before I finally was able to just pay the whole thing off.
That was a quick lesson with both loans and citibank for me
November 7th, 2007 at 7:16 am
There’s a saying I’ve heard, and I mean to bring it up here but rarely do: “Nobody cares more about your finances than you do.” This is especially true with regards to big banks. It is imperative that you keep a close watch on your statements to be sure nothing like this is going on.
99% of the time, there’s never any trouble. But that 1% can make your life a living hell. It’s very important that when something goes wrong — and it’s not your fault — that you raise a stink. You don’t have to be rude, but be certain to be assertive and to stick up for your rights. This can be difficult since large institutions seem strong, as if they have the weight of dollars and the law. But do it.
My brother has a story that boggles my mind. He and his wife had a credit card with Bank of America. They carried a balance for years, always sending payment just before the due date. Then they began to receive late fees. My brother called to find out why and was told that his payment was arriving the day after it was due. He thought this was a little odd since it had always arrived on time before, but he started mailing his payments a few days earlier. Still he got late fees. He paid even earlier. Eventually he was mailing payment on the day he received his bill. Still he was charged late fees. Naturally, he blew a gasket. “How in the hell can I possibly pay you any sooner?” he ranted. “I’m mailing the bill on the day I receive it and you guys still claim it’s arriving a day late.”
They didn’t have a good answer for that one.
November 7th, 2007 at 7:28 am
I think this reinforces another reason to work hard to clear your debt and get these people out of our lives. They aren’t out to benefit you in any way, IMO.
November 7th, 2007 at 8:00 am
A coupld of follow ups:
“I have a Citibank Student Loan and noticed a another scam. All of the sudden I automatically stopped receiving a paper bill. At the time I relied on paper bills to keep track of what needs to be paid. It never got in my pipeline and never was paid. And a late fee occurred.”
I’ve noticed this type of scam as well. A lot of times if you access an account online you are agreeing to stop paper bills and switch to on-line bills. This happened to me with ADT. I didn’t receive a bill, was chaged a late fee, etc. ADT did waive the fee but I found the whole process sneaky.
“I don’t see how they can assess late fees for loans that were paid in full. When you pay a student loan off, you typically get your promissory note back stamped ‘paid in full’. That should be more than enough evidence to dispute any charges on a closed account. OF course, you would have to tell citibank to F– off, and have them report you to the agencies to dispute it like that, so maybe its better to just pay the $40.”
We’ve paid off one of my husband’s MBA student loans and we have received no paperwork indicating the loan has been paid in full. I’ve asked husband to call and request same. I was all over husband on this b/c of these types of stories, errors (on purpose or otherwise) can happen especially when the loan has been sold more than once.
November 7th, 2007 at 8:04 am
I’ve never heard any problems with Washington Mutual. BoA, Citi, Wells Fargo= teh suck!
November 7th, 2007 at 8:26 am
And with the ongoing foreclosure issue peaking at around 2009/2010, I’m sure these nickel and dimeing schemes are just going to get worse.
I’m only $1,500 in debt outside of my car payment. Now is the time for me to get these paid off and closed. Then work on paying off my car early.
November 7th, 2007 at 8:33 am
Via The Consumerist, here’s a NYT piece on the dubious fees banks are charging people who are facing foreclosure.
November 7th, 2007 at 8:39 am
“We’ve paid off one of my husband’s MBA student loans and we have received no paperwork indicating the loan has been paid in full. I’ve asked husband to call and request same. I was all over husband on this b/c of these types of stories, errors (on purpose or otherwise) can happen especially when the loan has been sold more than once.”
How long ago? it took my loan company a good 6 months to get my note back to me. of course, I *think* it was a perkins loan, so YMMV with private loans. I would call them everyday until they agree to send it.
Funny though that when I paid off my car, I got the title from GMAC in a couple days.
At any rate, that’s good to know. I have a student loan with Wells that’s a couple months from being paid-in-full, and its good to know I might have to bug them about it when i do pay it off.
November 7th, 2007 at 8:59 am
It’s no different than someone offering “protection” insurance. It’s a shakedown.
I can’t wait to see the class action lawsuit on this one.
November 7th, 2007 at 9:04 am
To be clear, we were not tracking our finances like we should have been in 2005, so we did have some late fees at that time, I do not have statements from the loan at that time, so I have no way to compare what we actually paid, to what Citibank claims we owe.
November 7th, 2007 at 9:27 am
Mercy! This happened to me too!!! I questioned it, but the hassle CitiBank was making me go through was ridiculous so I just paid the $35.00. Exactly what CitiBank wanted: Mission Accomplished.
November 7th, 2007 at 9:28 am
We have a mortgage through Countrywide and I noticed a strange fee for $40 on our mortgage bill. I called Countrywide and found out that when any bank or other party pulled our credit to offer us a house loan, Countrywide charged us $40!
I told them these offers and credit pulls were unsolicited and unauthorized. They credited the $40 back. I then went back through every bill for the last 3 years and found that we had been charged this $40 fee additional times. The $40 fees were taken from what would have been paid to our mortgage principle.
We were able to get all the $40 fees credited back but unable to get Countrywide to make up the difference in interest that was lost due to those $40 fees not being applied to our mortgages principle. It certainly pays to closely look over all statements.
Because we pay the same amount every month, I wasn’t as diligent as I should have been.
November 7th, 2007 at 9:51 am
The Bank of America credit card division moves its due dates around to confuse customers. They also set due dates on Sundays or holidays. They push customers to move to the paperless bill to “increase security.” Then the website has problems loading right around the 8th of the month when bills are due. If you try to pay by phone, they charge you $30.
I never carry a balance and always pay off my card the same day I use it. I even signed up for email reminders and automatic pay as a backup in case I forget. Still, I’ve been caught with one or two late fees due to the inability to pay. When I call to tell them I couldn’t pay because the website didn’t work, they say “we’re terribly sorry and we will fix that for next month”
Twice there has been a mysterious $45 charge with no explanation that they apologized profusely about when I called, but only after I waited on hold for more than 15 minutes and asked to speak to a manager.
Credit cards aren’t worth the hassle.
November 7th, 2007 at 9:56 am
In UK, banks have had a wake up call lately on trying to get away with ridiculous charges. Many customers have been compensated either with in court or out of court settlements. It has sent a very strong message to the banks.
http://www.bbc.co.uk/radio1/news/newsbeat/070417_banks.shtml
November 7th, 2007 at 11:06 am
BOA will not let you cancel your CC over the internet.
Here’s the form letter I got. If I was such a valued member, they would’ve been crying to keep me
Thank you for contacting Bank of America regarding your, Credit Card. We
are happy to assist you.
While we make every effort to assist our customers who contact us by
e-mail, there are certain situations which require a conversation with
an account specialist. Since your account requires special handling,
please contact our Customer Assistance Department at 1.800.732.9194.
Please be assured that we know your time is valuable to you and we would
not direct you to contact us by telephone unless it were absolutely
necessary.
We value you as a customer and appreciate your business. If we may be of
further assistance, please contact us again by e-mail. Thank you for
choosing Bank of America.
Thank you for being a valued member.
November 7th, 2007 at 11:17 am
If your story weren’t outrageous enough, hevvin help us, the tales told by your commenters are enough to stand everyone’s hair on end! “Thank you for being a valued member”…snark snark snark!!!!
Complain not just to the attorney general in your state but to the AG’s office in the state where this outfit is headquartered. Then remember that there is a federal banking commission. For those of us in the Southwest, it’s located in San Francisco. Find out where your regional office is, raise Hell, and put a block under it!
Send copies of your complaints to the Better Business Bureau, to Consumer’s Union, and to your state banking commission.
This whole thread is making me hyperventilate!!!!!
November 7th, 2007 at 11:37 am
Just one more reason we should all avoid doing business with credit card companies altogether.
Just think of all the money they’ll make, then add on people who don’t have the money in their accounts to cover the extra fee who’ll then get smacked with a late/NSF fee!! Smart.
People, if this doesn’t make you cut up your credit cards, once and for all, what will??
November 7th, 2007 at 11:58 am
You’re right, it’s always important to check your bills and statements each month, whether it be loans or credit cards. I also do automatic debit and have a bad habit of not checking sometimes. I need to change my habits. You never know what could secretly pop up in your credit card statements either through errors or other reasons.
-Raymond
November 7th, 2007 at 11:59 am
Icup, The MBA loan #1 hasn’t been paid off that long so maybe that’s the catch. The funny thing is the company sends my husband monthly letters letting him know he doesn’t have a payment due since we are paying a ton extra to get the loan paid off in 2007. I find it funny they have the time to send do not pay letters (especially since we do all our payments via the internet) but have not sent us the “paid in full” letter but perhaps its different deparments…. I’m still anxious to get the paid in full documentation due to these types of issues.
November 7th, 2007 at 6:17 pm
This seems to me like a clear case of “close your account with the bastards”. If a company tries to charge you a supposed late fee from two years ago without informing you, they are not worth doing business with.
It seems to me that if they made an error two years ago, it’s their problem and they should not go after their customers 24 months later.
November 7th, 2007 at 10:10 pm
Just commenting for an alternate perspective. I want to recommend that if anyone here has access to USAA, to use them for ALL your banking and insurance needs. I’ve never been victimized by a “nickel & dime” charge, and on the rare occaisons that I haven’t been able to get my credit card payment in on time, they have always been willing to work with me to avoid a late charge or finance fee. Not to mention their customer service has always been phenomenal.
I’ve been a customer for the past 8 years and hope to be for another 50 more.
November 8th, 2007 at 9:11 am
Local credit unions are also a great alternative. I have never had anything suspect happen with my credit union in 5 years I’ve been a member. And when I call, a real person who is actually at the branch I called answers the phone. Amazing!
November 9th, 2007 at 3:20 am
Star Money Articles for the Week of November 5…
Here are some recent interesting posts from the MoneyBlogNetwork and beyond: Get Rich Slowly warns to beware Citibank’s retroactive late fee. Consumerism Commentary covers Britney’s finances. AllFinancialMatters tells how to turn desire into gold. Mi…
November 9th, 2007 at 6:57 am
[...] Beware of Citibank’s Retroactive Late Fee - How would you feel if your credit card company suddenly applied a late fee to your account to make up for something that happened in 2005? Yeah, I’d be pissed too. [...]
November 9th, 2007 at 1:48 pm
[...] Get Rich Slowly talked about Citibank’s retroactive late fees with one example dating back two years. I thought credit card companies had shaped up their act by eliminating two-month finance charge cycles, but this is a new one: http://www.getrichslowly.org/blog/2007/11/06/beware-of-citibanks-retroactive-late-fee/ [...]