No Late Fee Credit Cards - What is the gotcha?

Question

For weeks now I've been seeing ads for the Citi Simplicity card and Discover IT Card all over (be it on the NYC subways, TV, magazines, etc.) which boast a couple of features but I'm very curious about the No Late Fee Penalty with the Simplicity.

Discover I know says they'll waive the fee once, but on the Citi Simplicity, they boast never charging a penalty APR or late payment fee. Out of curiosity I did some searching but I can't find any information on if Citibank is pretty much letting cardholders default on debt until it's convenient, or if they have some caveat in the fine print.

Off the top of my head I can guess a late payment will still ding a credit score (late fee or not) but that's just a guess.

If anyone can provide some insights on how this fee-waiver works, it would be great because I've been stumped for awhile.

Answer 1

'Late' is simply missing the due date. The fine print with probably say you can't just ignore the card for 60 days, they are just willing to play loose with the one due date. No, the report doesn't get hit. But, interest is accruing. So if you were planning to pay in full, but miss the date, no penalty, but the month's interest, say 1.5%, will be charged.

Edit - ask the bank how many days grace there is before the late payment is reported to the credit bureau, we don't have consensus on that number here.

Answer 2

The Advertisement says no Late Fee or Penal Interest Rate.

Normally if you pay the minimum by the due date, there is

• Normal APR applicable.

If you don't make a payment or make the payment after the due date or don't make the minimum payment, there is;

• Normal APR
• Fixed Penalty Fee for late payment
• Additional Penal Rate of Interest

What the Citi Card is offering is:
If you don't make a payment or make the payment after the due date or don't make the minimum payment, there is;

• Normal APR
  Even the normal APR is being waived for first 18 months on Citi or 14 months on Discoverer.

Although the fine prints are not available; it could very well be quite a few things;

• Cap on the Card Limit. If you get a card with a limit of $500. It doesn't cost much of the Bank to recover this over a period of 18 months.
• There is no mention on minimum amount due every month, most cards have 5%. This one for all we know could be 25%.
• There are no reward points or other cashback as available maybe with other cards. This would save the Card company some money.
• The fine print could also be that only initial months purchases will get 0% APR and unless these are settled, the new purchases will attract higher APR.
• The card may only be issued to someone with GREAT Credit history, the adv a mechanism to attract good customer who always repay on time and would never use the feature but want it just in case.
• There could also be limits on which purchases enjoy 0% APR [ie min / max amount per tranaction, etc] in the fine prints.