Review: Citi Simplicity

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One of the most common complaints about credit cards is that they’re way too complicated. Terms are spelled out in pages of fine print, complete with asterisks and footnotes. Wouldn’t it be nice if a bank understood your frustration? Citi Bank offers its Simplicity card, which is notable not just for what it has, but also what it doesn’t.

Key features…

  • Fees. Simplicity means no annual fee, no late fee, and no penalty interest rate. But there’s a 3 percent fee on both balance transfers and foreign purchases, a cash-advance fee of 5 percent, and a returned-payment fee of up to $35.
  • Standard interest rate. The standard APR is 12.99, 17.99, or 21.99 percent depending on the applicant’s credit history.
  • Promotional financing. Citi is offering a zero-percent introductory APR for 18 months from the date you open your account that applies to both balance transfers and new purchases. There’s still a 3 percent balance transfer fee.
  • Purchase protection policies. Citi will extend the terms of the manufacturer’s warranty, offer price protection for 60 days, and insure your purchases against theft, fire, or accidental breakage – up to $500 for up to 90 days from purchase.

Advantages…

  • Generous leeway. When payment arrives a day late, cardholders are often outraged when they incur a late fee and a penalty interest rate. With Simplicity, these harsh terms don’t apply. (But being late will still cost you. Keep reading.)
  • Great promotional interest period. Eighteen months of zero-percent interest on purchases and balance transfers is one of the longest promotional financing periods being offered. Just be aware of the 3 percent balance transfer fee.
  • Good warranty and insurance coverages. You get a wide range of valuable purchase-protection policies more commonly seen on cards with an annual fee.

Disadvantages…

  • You still need to make payments on time. Just because you won’t incur late fees or penalty interest rates doesn’t mean that you can pay whenever you feel like it. Interest at the standard rate will continue to accrue – and late payments can still hurt your credit score.
  • No rewards. While many no-fee cards offer cash-back rewards of 1 percent or more, this ain’t one of them. But this card is aimed at those struggling to make payments on time, so they’re the last people who should think about rewards. Get accustomed to paying on time, and you can move up to more lucrative cards.
  • Tempting promotional financing. Again, if people who have trouble making payments are getting this card, should they really be enticed to spend freely with a temporary promotional interest rate? In 18 months, the music will stop, and cardholders might find themselves in trouble.
  • There’s still plenty of fine print. You and your attorney can read its terms and conditions as well as the limitations on its benefits. In short, it’s simpler, but not that simple.

Bottom line…

Get it if: You’re a responsible credit card user who just doesn’t deserve harsh punishment if a payment is late once in a while.

Forget it if: The offers of promotional financing and forgiven late fees might make you fall off the wagon of responsible credit card use.

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