Wednesday 22 July 2015

Citibank Credit Card overcharging finance interest in Malaysia

Is Citibank credit card as well as other banks prone to overcharging the finance interest? A quick search online and I found several complaints in other countries but have not found any posting in Malaysia. Either nobody knew they were overcharging, or even they did experience it but didn’t made any blog post and thus no such info was found in the public domain.

I have been a loyal Citibank credit card user for so many years. I think I have been with them for more than 10 years. Still, loyalty count for nothing when it comes to customer service from Citibank Malaysia.

My July 2015 statement came out and I was surprised at the higher interest charge. In the statement they gave a detailed formula on how they calculate interest if there is any amount not settled after the due date.

The formula was straight forward enough:

f = B x (P/D) x R
 f is finance charge
 B is Balance on which 
  finance charge will be levied
 P is Period in days in which the 
  balance B will be levied 
  with finance charge
 D is the number of days used 
  as the base for the annual rate
 R is the annual rate stated for 
  nominal finance charges

I had used a fair bit and accumulated credit usage to RM5,652.64. I was a bit cash strap and initially cleared off RM3,652.64 before the due date on 23rd June leaving me a balance of RM2,000 still outstanding. When my funds finally came in, I made the RM2,000 balance payment on 29th June, which was 6 days past the deadline date. I figure several days after the due date won’t be much on the interest charge. Little did I know how wrong I was.

In the statement it showed the current month Citibank finance rate to be 15.00%
Using the formula Citibank provided, the calculation as follows:

f = RM2000 x (6 days / 365 days) x 15% = RM4.93

The finance charge that I calculated above is vastly different from the statement which showed RM26.65 interest charged.

When I called up Citibank customer service, they too could not reply to my query, instead they said the account department will reply to my complaint in 3 days. Two weeks has passed and still no call back from them. I decided to write in a letter and see what will be their response.

Meanwhile, while waiting for their reply, I decided to post a blog to highlight this matter to the public and to make people aware of such overcharging tactic to earn extra monies from loyal credit card users. It seems this practice is also done in other countries when I did a quick search online. Such malpractice seems rather unethical for such a large well known global banking institution. Perhaps they think the consumers are small fry and to find recourse by the consumers take up too much effort on our part. Sure, my sum wasn’t very big. But if they can overcharge with a small amount, they can do it for with a larger amount too. Perhaps 1 out of 10 would take note of the overcharging amount and complaint about it and perhaps out of the several that complained, the banker would entertain for a refund. That still left with many who were overcharged, meaning they would stand to gain from such bad practice of overcharging.

Anyway, I’m still waiting for a reply and would update a post of any eventual outcome from this fiasco.

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