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Citibank Credit Card




On June 16, 1812, City Bank of New York (now Citibank) opened for business in New York City with an authorized capital of US $2 million and paid-in capital of $800,000, under Samuel Osgood as President. The Citibank credit card paid out its first dividend the very next year, amidst pomp and splendour.

Since then, over a prolonged period of almost 200 years that has witnessed both amazing and horrifying eras, Citibank credit card has continued to grow and prosper. It changed its name several times, becoming the popular The First National City Bank of New York in 1955, only to drop the New York suffix in 1962, finally settling in its present day avatar of Citibank, N.A. (for National Association) in 1976. In a parallel development in 1968, First National City Corporation (later renamed Citicorp), a bank holding company, became the parent of the First National City Bank. In 1998, all Citicorp divisions like Citi Cards, CitiFinancial, CitiInsurance, Diners Club and CitiCapital, among many others, merged with all divisions of Travelers Group to form Citigroup Inc. Citigroup Inc. is todays pre-eminent financial services company, with some 200 million customer accounts in more than 100 countries. Citibank stands out as a colossus under the Citigroup umbrella.

The concept

The concept of using a Citibank credit card for purchases was invented in 1887 by Edward Bellamy. The credit card was the successor of a variety of merchant credit schemes. It was first used in the1920s, in the United States, specifically to sell fuel to a growing number of car owners. The First National City Bank entered the credit card business in 1965 and introduced its first credit card, the First National City Charge Service, best known as the Everything card, two years later. The "Everything" card was converted to Master Charge (today's MasterCard) in 1969.

Plastic money

Plastic Money, another name for credit cards, became very popular with growing rates of muggings and robberies. This allowed spenders to stop carrying any big sum of money on themselves. The credit card, as we know today, is a rectangular piece of plastic embossed with details like the name and in certain cases, the photograph of the card holder; the 16-digit individual card number; confidential data stored in a magnetic strip on the reverse in a similar manner to magnetic tape or a floppy disk and a specific code number that is not embossed. Most credit cards are the same shape and size, as specified by the international ISO 7810 standard.

What a credit card actually is

A credit card system is a type of retail transaction settlement and credit system, in which the card plays the central part, where the issuer of the card lends money to the consumer. It is different from a debit card in which, during every transaction, the money from the users account is removed. It is also different from a charge card, which requires the balance to be paid in full each month, in that it allows consumers to 'revolve' their balance, at the cost of having interest charged.

How citibank credit cards work

Normally, the first step should come from the applicant, but in todays highly competitive era, Citibank approaches prospective customers with attractive schemes and various types of cards. If the user is interested, he/she applies for a card best suited to the user. In the approval process, Citibank credit card checks out the salary levels of applicants, bank balances if possible, credentials and past record of defaults, if any. It also checks the dates of birth, education levels and other details available from Federal Data, particularly criminal records. A user is issued a credit card after due clearance, with which he or she will be able to make purchases from merchants accepting that credit card up to a pre-established credit limit which is based on the parameters stated earlier. This card is then mailed to the applicant, separately from a unique 4-digit numerical pin code. The pincode is to be memorised and then destroyed, to prevent fraudulent use of the owners card.

When a purchase is made, the credit card user agrees to pay the card issuer. Originally the user would indicate his/her consent to pay, by signing a receipt with a record of the card details and indicating the amount to be paid, but many merchants now accept verbal authorizations via telephone and electronic authorization using the Internet.

Exercise caution when using your card

An electronic scanner that is linked to a Citibank centre allows vendors to run the card through a swishing device that reads the magnetized strip of material on the card holding information, to verify that the card is valid and the credit card holder has sufficient credit to cover the purchase. Verification takes a few seconds, without really affecting the time spent at the counter. Other variations of verification systems are used by vendors to determine if the user's account is valid and able to accept the charge. It is possible that unscrupulous vendors or their employees copy the confidential data on the card and quickly exhaust the balance available on that card. This felony is known as Phishing.

The billing cycle

At the end of each month, the credit card user is sent a statement indicating the purchases undertaken with the card, and the total amount owed. Normally, a 15 day

period is given to the cardholder to clear all dues. In a dubious money-making scheme, the card holder is also given a minimum amount of the bill to be paid by the due date. If the card holder pays the minimum amount, interest is charged on the unpaid amount at an uxorious rate of 2.95% per month, a startling 35.4% per year! If payment is delayed, a late payment fee is added to the next months bill. Citibank waives interest charges if the balance is paid in full each month by the due date.

Citibank ATMs

Citibank provides a number of Automated Teller Machines for the convenience of its cardholders. It normally installs them at places where there is a lot of activity, like markets, shopping malls and eateries. This is a smart move, as research has shown that such ATMs disburse up to 40% more cash than others. It is prudent to shield your pin code from prying eyes when withdrawing cash from the ATM. Citibank charges a cash withdrawal fee and interest at the above-mentioned Shylockian rate, so it is best to avoid drawing cash from ATMs. Of course, there are occasions when there are no alternatives.

Citibank has many loans to offer, but these should be avoided as the rates are very much higher than prevailing bank rates. Citibank provides special convenience checks to their customers to use when paying with their card is not an option. Credit is a powerful tool, but also a big responsibility. If a customer uses credit improperly, it can lead to unmanageable debt and financial crisis. Citibank provides a lot of assistance through its easy to use website, It also runs call centers to assist its clients in times of need or doubt. However, be prepared to wait quite a while before your call is attended to. If using a phone booth, keep several coins handy.

All said and done, if used wisely, Citibank Credit Cards are a blessing which one must be grateful for.

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