Citibank Credit Card Interest Charged - Refund Not Treated As Payment

wcm8382 on 10/04/2017 - 22:29
Last edited 11/04/2017 - 09:39 by 1 other user

As the subject suggests, I've been slugged with interest and residual interest by Citibank for not paying off my credit card balance in full on time, even though I actually have. Today, I called them and found out why. Part of the payment for the balance was made from an organisation that paid directly onto my card. The rest I paid with BPAY. However, Citibank says that the payment made by the organisation will not go towards paying off my balance. They say that they treat refunds or chargebacks onto credit cards differently. Therefore, from their view, I did not pay off the balance in full on time and got slugged interest. Now, I have already been offered a full refund of the interest but wish to know the following - is this normal or unusual? Personally, I cannot understand why they would treat this type of payment any differently from a BPAY or bank transfer. Am I missing something? FYI, the money I received from the organisation was a refund but the original payment was made using a different card, so the Citibank card only has a record of the money coming in, not going out. Thanks.

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  Earl of Lemongrab on 10/04/2017 - 23:14

  So they've charged you interest on an account with a nil balance at statement due date?

  • 

    Rumbaar on 11/04/2017 - 08:26

    Yeah, seems strange if that is the case. That's the only question that seems to be not fully spelt out in the post.

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    wcm8382 on 11/04/2017 - 08:50

    Spot on! I found it unusual too..

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  nick111 on 10/04/2017 - 23:34

  +3

  Yes, it's normal. It's generally covered in the terms and conditions.

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  Samsungnote10 on 11/04/2017 - 07:54

  Generally it's to avoid people from counting refunds as payment as part of payments as part of financial responsibility by the bank

  Eg. You buy two things for 1k and 5k
  Get the second refunded. If you counted it as a payment you're technically not being financially responsible in paying off the 1k item.

  However like it happened to me recently. My refund put me into severe credit and I was told I still had to make the previous statement balance to put me into even more credit.

  No one seemed to know if I would get charged interest with a positive a balance if I had not made the payment. I judt made the payment to avoid the charges. However it did inconvenience me that I had to try and spend the credit in order to get back to zero

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    wcm8382 on 11/04/2017 - 09:02

    Your personal experience only goes to further demonstrate how absurd this whole thing is. How is using a refund for payment not being financially responsible from a technical pov? At the end of the day, the bank is still getting paid what they are owed, so isn't that being more responsible than say not paying them back on time?

    • 

      Samsungnote10 on 11/04/2017 - 10:20

      It's the same as counting gambling purchases as cash advances. Previously they did not.

      The bank still makes the money from merchant fees.

      Or various companies that change their policy to say purchases from certain providers won't receive rewards points.

      It absolutely pisses me off to be honest

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    Earl of Lemongrab on 11/04/2017 - 12:58

    Generally it's to avoid people from counting refunds as payment as part of payments as part of financial responsibility by the bank

    I honestly can't see that concept working…

    Bank: "Sorry wcm8382, even though your account was paid in full and on time we feel that you were financially irresponsible because we deem muh refund isn't payment. So pay interest, you irresponsible person. After you pay interest your balance will be cleared."

    I think regardless whether it's included the bank's terms and conditions it's unfair. Substance over form. A payment was received and applied to your account. Your account is not owing funds at statement cut-over so logically no interest is payable. Wonder if the Financial Ombudsman would be interested to know this.
    </thread>

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  pencilman on 11/04/2017 - 08:05

  That actually sounds really unusual. The credit would have been applied to your outstanding balance.

  I have set up autopayment of my outstanding balance on the due date with Citibank, and in the past when I have had refunds only the remaining amount is withdrawn (ie. the refund has been counted).

  Could the following have occurred?
  The credit was still pending when your payment date was due.
  You still needed to make a small payment even though a credit refund had occurred on you account - this is prob a bug in the system.

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    wcm8382 on 11/04/2017 - 09:06

    Credit was not pending when my payment was due. It was cleared at least several days before the due date. Like I've said, it was due to the refund which I think is unusual but the bank sees it differently.

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  Console on 11/04/2017 - 11:32

  I can confirm that Commonwealth Bank do treat refunds as payment towards meeting your closing balance (provided you make a small cash payment alongside it).

  I was in a situation where I had a $1000+ refund come through, which on its own paid back my outstanding balance.
  I wanted to know if I still had to pay the outstanding balance or whether the refund would be sufficient to pay off the outstanding balance so I called up CommBank support before the due date. They gave me an immediate answer: I simply needed to pay a minimum of $25 to my credit card and by doing so, this would allow the refund to contribute to meeting the outstanding balance. Apparently I had to pay at least $25 otherwise the refund would not be counted, which was fine with me.

  Therefore, I only paid $25 that month (which was far less than the outstanding balance) and received no interest, confirming that CommBank do count refunds as payments.

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    wcm8382 on 11/04/2017 - 17:14

    Interesting to hear that. So in your case, they treated the refund as payment AS LONG AS you paid at least $25 of your own money.. don't really see the logic there.

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  redforever on 11/04/2017 - 13:47

  OP. After accounting the refund, was your account balance zero? In other words, have you made other purchases after the last statement?

  Was wondering if the bank took away your interest free days for the new purchases.

  • 

    wcm8382 on 11/04/2017 - 17:14

    Yes, it was zero and still is zero.

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  snook on 13/04/2017 - 15:42

  I have citibank and often get refunds for one thing or the other. I just pay the final balance every month and that's that. I've not been charged interest … so i'm confused as to what has happened here

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  coolsteps on 13/04/2017 - 23:08

  i have a westpac card with a 0% 12 month balance transfer balance and i got charged interest for a priority pass visit $27usd that was charged to the incorrect card so i paid $40 right AWAY TO cover the refund and avoid incurring interest. however the purchase has been refunded since but i keep on getting charged 12 cent interest every month now. might have to call them up and ask if they fix it so that i dont keep on getting charged every month. so beware i know citibank and westpac for certain have this practise.

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  gizzard on 06/05/2017 - 14:10

  I have just had a similar experience. I had a refund that I assumed would count as part of my payment towards the previous month's closing balance. It didn't so Citi hit me with interest charges even though they never informed me nor showed me on a statement that I was "overdue".

  I got these charges refunded but don't know how my "missed payment" will have hit my credit rating.

  Citi said that I needed to pay the amount in full ignoring any refunds and then they'd send me a cheque if required for any amount that I had in credit.

  Crazy.