Monday, December 17, 2007

Shell Citibank Credit Card

Shell Citibank Credit Card - A Cash Draining Card
Fancy getting a credit card that offers 5% rebate on shell petrol and 1.5% rebate on other purchases? If your answer is yes, then you are draining your money away!

The newly launched Shell Citibank credit card is not as good as its sounds - to enjoy the rebate, you must have a carry forward balance. Yes, a carry forward balance that you have to pay Citibank 18% interest per annum. But that's is not all, your so called 'rebate' is based on your current month spending. That means if you have a carry forward of RM10,000 but did not use the card at all for the current month, you get 'zero' rebate.

To be precise, this 'rebate' card is an old card - it has been around for about 2 years. But now taking advantage of the fuel cost concern, Citibank co-branded it with Shell.

This is how the rebate scheme works:-
First, you need to have a carry forward balance. The amount of that carry forward determines the rebate rate (%) that the card holder is getting.

Then based on your current month spend, you will get the rebate (as shown by the rebate table above) - your rebate is not based on your total carry forward balance. Repeat: your rebate is not based on your total carry forward balance, but current month spending.

In short, to get your 'rebate' you must have at least of RM2,000 outstanding balance in you card AND continue use the card. The outstanding balance is the net of previous month balance minus current month payment.

If you do that, every month you will be paying RM30.00, or RM360 a year for the minimum RM2,000 outstanding balance.

Let's do a simple math here:-
If you spend RM500/mth on shell petrol and your classic card has a RM2,000 outstanding balance, at 1.5%, you are getting RM7.50 as 'rebate', while at the same time, paying RM30.00 for the interest. The 'nett' profit for Citibank is RMRM22.50. Your are essentially "over paying" 4 times the price (30/7.5)

To 'break even' (so that your RM30.00 interest payment = rebate value), you need to pump RM2,000 shell petrol a month, or charge RM6,000 a month for non-shell related purchases.

The USD100.00 per barrel of crude oil won't kill you, but the Citi-Shell card will (Source: Smart Consumer Banking).

In my opinion, this rebate will benefit only the big spenders and if you own a petrol guzzling motor vehicle. Otherwise, the rebate doesn't make sense at all compared to the 18% p.a. interest that you are going to pay for the balance carried forward each month.
Tags: Shell, Citibank, Citi-Shell, Credit Card, Smart Consumer Banking

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5 Comments:

Blogger Nux V said...

hmnnn i read about tis too...

18 December, 2007 02:01  
Blogger Johnny Ong said...

its true to a certain extent

18 December, 2007 09:05  
Anonymous ASAP Credit Card said...

We'd love to get your feed back. We recently started a poll on the Worst / Best Credit Card Issuers. Feel free to stop by and give us your opinions.

15 January, 2008 05:35  
Anonymous CF said...

You have to realize that ~30% of credit cardholders revolve (ie, don't pay full each month). This is especially true for businessmen / SMEs who use the credit card to finance their business. Basically it is taking a loan. Many of them have a few cards so that they can take a bigger loan. So for these revolvers, its attractive since they are already carrying forward their balance each month.

14 May, 2008 07:24  
Blogger Johnny Ong said...

ok, it works for a certain group of people on this face of the earth

14 May, 2008 09:48  

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