Citi Offers Lower Interest Rates For More Card Usage
Classified as: Credit Cards, News
Citibank has recently introduced a new policy which enables some of their customers to reduce their interest fees, by using their card on a regular basis.
According to the plan, cardholders who spend up to a certain defined limit each month will qualify for the interest rebate. Although it would still be more profitable for Citi, it’s bad for consumers across-the-board.
You can categorize the credit card holders as those who use he card for convenience and those who use it for a short-term loan. The first category usually pays off their balance each month; whereas the second category runs a balance, incurring interest fees.
Basically, citi wants both of these categories of customers to spend on the card as much as possible. If the convenience users use it more, it will result in higher interchange fees, which is how Citi will make the profit. And is the card is used for short-term loans, a greater amount spent would result in an increase in the return time.
Thus if you analyze this from the customers point of view, it is rather bad then good. The customers are being rewarded for spending more money, instead of clearing their balances.
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