Help. Citibank Card Repayment Did Not Deduct High Interest Debt

bargainsteve on 05/04/2020 - 18:02

I have a Citibank credit card with $4,000 balance transfer debt. I also have about $2,000 high interest retail debt on that card.

I made a huge repayment in January, thinking that it would remove the high interest debt. Today I realised that my 0% interest debt is only $1,000, while my high interest debt is untouched!! This is outrageous.

I am quite certain the law prohibits this.

How can I pay off my high interest debt then? Please help. I sent Citibank a message to look into this, no response yet.

Financial

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Comments

  • Ocker on 05/04/2020 - 18:06
    +1

    I am sure it will be fully explained in the PDS - have you read the document?

    • iforgotmysocks on 05/04/2020 - 18:11
      +3

      The PDS said to ask OzBargain.

  • outlander on 05/04/2020 - 18:10
    +1

    How can I pay off my high interest debt then?

    By getting a loan from somewhere else and using that.

    These financial systems are pretty much exclusively designed to work against you. If there's two debts in the account, then any money that you put in goes to paying off the lower interest one first.

    • mbck on 05/04/2020 - 19:03
      +1

      I thought there was a change, so that the payment is made to the highest interest. I remember seeing this.

      Welp yes, see comments befoer

  • brendanm on 05/04/2020 - 18:19

    https://www.finder.com.au/changes-to-the-allocation-of-credi…

    I would suggest calling the bank. If they don't help, contact financial ombudsman.

  • bobbified on 05/04/2020 - 18:20
    +8

    How can I pay off my high interest debt then? Please help. I sent Citibank a message to look into this, no response yet.

    Prior to the credit card reforms in 2012, it was common practice for banks to apply the repayments to the lowest interest amounts first (so that they could maximise interest charged). It was one of the big "catches" in their 0% interest balance transfer offers.

    Post the reforms, they must apply the repayments to the portion that has the highest interest rate first.

    What should you do? Keep trying to contact Citibank. They'll have to fix it.

  • RM on 05/04/2020 - 18:35

    Bobbifield is correct. Credit or loan accounts set up prior to July 2012 were setup in a way that you pay the lowest interest item first. This changed after 2012 and now by default the payment goes to the higher interest rate item first. This applies to default settings of the account and did not make changes to any existing accounts held prior to 2012.

    1. Call the bank to change this setup…once done you will not be able to change it back.

    2. Ask Citibank to reallocate the old payment as you wish it to be.

  • tsunamisurfer on 05/04/2020 - 19:12
    -4

    What a BS law….it the repayments should apply to what the bank wishes and openly stipulates in their PDS.

    • bliz on 05/04/2020 - 19:39

      you're anti consumer, then, or just work in the banking industry?

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