Monday, August 1, 2011

Citi's Simplicity No-Penalty, No-Fee Credit Card: HUH!

Citigroup has launched a credit card that combines the three most requested benefits, card holders have been requesting. They are not late fees, no penalty interest rate, and a single interest rate for purchases, balance transfers, and cash advances.

The new Simplicity card will be sold as a way for busy people with busy schedules who want a credit card with simple terms, said Jud Linville, CEO of Citi Cards. “It lets them not have to worry that they’re going to be late on a payment. It provides some flexibility,’’ he said.

It sound like a good deal at first, but this new card comes with an interest rate 16.99 percent interest. The national average interest rate is 14.40% according to If you carry a balance, the extra conveniences may not out way the higher interest rate. But if you're prone to have late payments, you won't be penalized a late fee, which could range from $35 to $45 dollars. At least with the higher interest you know every month what you will be paying. Also if you are already paying a high monthly interest already, another percent or two makes very little difference.

No Late Fees?

The no late fee feature is an uncommon occurrence in the world of credit cards. states that only 5% of credit cards do not charge a late fee and only 8% of cards charge a single interest rate for purchases, balance transfers and cash advances.

The Simplicity card also doesn’t offer any rewards, which can be a deal breaker for some. Or it may turn out you won’t qualify for the card. Citi declined to specify what type of credit background is required. But, which lets consumers search and compare card offers, lists the Simplicity card for those with “excellent’’ scores of 720 or higher.

Citi has revamped this card to coincide with the new regulations coming out of the Consumer Financial Protection Bureau. Many credit cards will be moving to these types features. They will be losing quite a bit money in cutting these fees so with the interest rate increase they will be making it up in some way.

The upside to this card is the elimination of theses pesky fees. If you carry a balance you will have to deal with the higher interest rates. If you pay off your credit card bill every month you will never have to pay a fee, even if you are late on a payment. It's a good deal if you don't carry a balance.

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