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Sunday, October 5, 2008

CitiBank Wants Me to Pay Off My Debt

Citibank N.A.Image via WikipediaCiti sent me a letter yesterday offering me to participate in their Payment Partner plan. Here's the deal: agree to stop spending on your card for 4 months, and at the end of 4 months they give you 10% of any payments you make over the minimum balance due up to $550. At the end of the period, they also reduce your credit limit by the amount of the payments over the minimum balance.

Not a good deal for me, because I have very low "for life" interest rates of 2.99, 3.99, and 4.99 on this card, and I have too much other high rate debt that I'd rather pay off first for this to make sense. The spending freeze is no big deal because I've never charged anything to this card--I just used it for balance transfers from higher cards. And this is one card at least where I haven't missed payments or any other such nonsense.

According to some quick Googling, this offer from Citibank has been around for a couple of years. Some speculate that it is only extended to those with damaged credit as a way to get folks to voluntarily reduce their credit line, reducing Citi's risk. See the article below on the recent trend of credit card issuers of reducing credit limits.

I have to say, that in all of my credit mess, Citi has been the best to deal with. They don't have the dreaded universal default clause that jacks up your rate if you are late with payments to other creditors. They have had reasonable balance transfer rates. Yes, you pay lower rate balances off before higher rate balances, but some of these low rates are for the life of the balance. You just have to be careful not to incur any higher rate charges that would negate the advantage.

Further Reading:
Consumer Credit Limit Crackdown by Jessica Dickler, CNNmoney.com
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