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Credit Card Applications » News » Other » Citibank Launches Spend More Pay Less Program

Citibank Launches Spend More Pay Less Program

February 07, 2010
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Citibank is launching a new spending scheme for its credit card holders, giving them an opportunity to avoid high interest rate charges by using their cards more. Under this said program, Citibank credit card users would need to meet a monthly spending requirement (up to $750 a month) to qualify for rebates on interest fees. Customers who qualify can enjoy partial or total rebates off of their total monthly interest charges. Another requirement for this program is that customers need to pay their monthly card bills on time.

Without going into details, Citibank said that it would be creating monthly spending requirements and interest fee brackets based on a cardholder's credit history. Clients can expect to generate 50% to 100% savings from interest rate rebates. The rebates will not only cover interest incurred for a specific month, but will be applied to the full balance.

Citibank currently holds the rank of the second biggest credit card issuer in the country, with their total number of credit cards issued at 92 million. Chase holds the top spot with a total number of credit card issued totalling 119.4 million. Bank of America is a rung below Citibank - firmly securing the third spot - registering a total of 80.2 million credit cards issued thus far.

The new spending program was launched in the midst of a landmark credit reform law proposal that has made credit card companies scramble to institute changes and mitigate perceived losses once this groundbreaking legislation is enforced. The CARD Act which is expected to be implemented in February 2010 would restrict a creditor's ability to hike credit rates and fees.

Citibank said that this new scheme is just one of the many they have in the pipeline, all of which are meant to keep the company competitive despite very challenging economic conditions. This year, the company reported a marked increase of unpaid loans and payment delinquencies, which was a reflection of the prevailing weak business conditions.

Another revenue stream that the company is planning to exploit using the new spending scheme is the area of interchange fees. With cardholders expected to increase spending to cash in on rebates, Citibank would in turn benefit through greater interchange fees. Merchants and stores pay interchange fees to credit card companies for purchase transactions involving credit cards.

On other news, Citibank will give a select number of cardholders an opportunity to enjoy lower interest rates provided that they agree to transfer some balances from their other credit cards to their primary Citibank credit card.

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