Citibank Credit Cards Balance Transfer Fees Increased

I have done a number of 0% balance transfers using my Citi cards in the past four years, and all of them were fee-free: I paid absolutely nothing for the free loans, including the latest BT from Citi PremierPass card. Though the card carrier says there’s a maximum fee of $250, my statement tells me it wasn’t the case. However, the free lunch seems come to an end.

I received a short notice from Citibank yesterday regarding changes on balance transfer fees. The exact texts from the letter says

We are removing the maximum dollar amount on the Transaction Fee for Balance Transfers. This fee will be 3% of the amount of the balance transfer, but not less than $5. This fee is a FINANCE CHARGE.

The change will be effective for billing periods beginning on or after April 3, 2007.

Without the cap, balance transfers with Citi cards will become less attractive as the more you transfer, the higher the fees you will have to pay. Even with interest rates at 5+% currently at most high-yield online savings accounts, the transaction fees will eat most of your savings if you do credit card arbitrage with Citi cards.

However, if you just received a new Citi card, then you may still get the cap on BT fees as Citi offers cardholders to opt out this change, temporarily:

If you opt out of this change you may use your card(s) under the current terms untill then end of your current membership year or the expiration date on your card(s), whichever is later. At that time your account will be closed and you must repay the balance under the current terms.

Now I am a little confused. What does “repay the balance” mean? It sounds like I have to pay the fees later even if I opt out now. And I don’t like my account be automatically closed.

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4 Responses to “Citibank Credit Cards Balance Transfer Fees Increased”

  1. Shelly |  Mar 28, 2007 at 8:18 am

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  2. Jonathan C |  Mar 28, 2007 at 9:01 am

    I just applied for the Citi Professional card. While a 3% cash advance/balance transfer fee is disclosed, the terms/conditions also state that the fee is waived with the particular offer. So I expect once I receive the card I will be able to carry out a fee-free cash advance online.

    Currently I believe Bank of America has the best 0% offer. No fee 0% cash advance checks for 12 months, see their “Platinum Plus” Visa and Mastercard accounts.

  3. perkinsm |  Mar 28, 2007 at 9:52 am

    I just did a 15 month $10,000 Chase transfer with a $75 max txfer fee. Gonna put it in t-bills….unless someone has a better idea.

  4. The Sun |  Mar 28, 2007 at 11:58 am

    Jonathan: I think there are many cases that the fees are deal-specific. In January I got a Citi PremierPass card which usually charges $75 annual fee. However, the one I got has no fee, not just for the first year, but not at all. I expect there will continue to have similar promotions with no-fee balance transfer once in a while. Also I found it’s quite useful to save the web page from which I apply for the card with all the fee/charge information. Sometime they do make mistakes,so it’s better to keep a record of the exact deal you get.