Citi Removes Caps on Balance Transfer Fees

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 itwasn’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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