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Citibank to sell credit cards business: Should you use your card, will your credit score be hit—all your questions answered

Once the new bank takes over the credit cards, terms and features of your existing Citi cards may change. You should move your incremental spending to other bank credit cards hereon

July 20, 2021 / 01:22 PM IST

In mid-April, Citigroup had announced that it will shutter its retail banking operations in 13 countries including India as part of a global business strategy. Citibank has begun looking for a buyer for its consumer businesses in India, including its established credit cards division.

Let’s decode the most common questions of Citi credit card customers pertaining to reward points, dues and more.

Should I continue holding the Citi credit card?

Do not rush to surrender the Citi credit card right away. Wait until the announcement of the new acquirer of Citi’s credit card business. “After such as announcement, you can plan to exit if you already have a credit card of the acquiring bank. You may not like to hold two credit cards with similar benefits in your wallet,” says Parijat Garg, a digital lending consultant.

Moreover, you should move your incremental spending to other bank credit cards. “This is because Citi credit cards won’t be that lucrative with a new acquiring bank. The entity that takes over Citi credit cards may devalue the reward points,” says a spokesperson from www.creditcardz.in. So, there will be no major benefit in accumulating reward points with Citi credit cards now.

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Will reward points be devalued?

Yes, devaluation on credit card rewards has happened in the past when there is a new owner. For instance, when State Bank of India (SBI) and other banks took a stake in Yes Bank last year, they reduced the value of reward points from 25 paise to 15 paise. This was in addition to reduced lounge access and other benefits with the Yes Bank credit card.

Therefore, chances are the reward points would fetch you a lot less than before in Citi’s case, too.

“Not to forget that Citi was anyway devaluing its own credit cards,” says a spokesperson from www.creditcardz.in. For example, in 2019, it stopped giving reward points while loading mobile wallets, paying the insurance premium, utility bill payments, etc. In addition, it took away some benefits on its flagship Citi Prestige credit card, such as ‘meet and greet’. “Therefore, if the acquiring bank doesn’t devalue, Citi may itself do it before handing over the credit card business,” he adds.

Also read: Want to use your credit card wisely? Stick to these spending and repaying rules

I have an ongoing dispute with the Citi credit card related to an outstanding amount. What I should do now?

If you have some disputes related to an outstanding amount or late payment charges with Citi bank, then clear them while it is still in operations in India and make sure your credit history is clean. Once Citibank exits its India retail business, getting a resolution to your card complaints might be difficult and time-consuming. “An unresolved dispute may also reflect in your credit report. In future, there could be challenges while applying for a loan,” says Garg.

Will Citi’s exit impact my credit score?

No, there won’t be any impact on your credit history, if you exit from Citi bank's credit card or you are transferred to the acquiring bank. “The credit history travels with you and it’s not linked to a particular organisation,” says a spokesperson from www.creditcardz.in.

What parameters should I evaluate to decide whether to continue with the credit card or exit?

The Citi reward points do not expire. But, the acquiring bank may set an some expiry date for your points, depending on the type of card. Ajay Awtaney, editor of LifeFromALounge.com, says, “When you are transferred to the acquiring bank, you must evaluate the acquirer's history and experience in the credit cards segment, whether existing benefits will  be continued or devalued.”

“Citi has global partnerships and it extends to credit card customers in India. But, after Citi's exit, these global benefits may go away, as the acquiring bank may not have such partnerships,” says Awtaney.

Also read: All about what you should do with travel credit cards now

Will my credit limit on Citi Prestige card be reduced by the acquiring bank?

The premium cardholders of Citibank – Citi Prestige and Citi Premiermiles – have higher credit limits. “The acquiring bank may reduce the limit by 10-20 per cent and evaluate customers’ credit performance for six months to one year. If there are no defaults and timely repayments are done, the limit may be revised,” says the spokesperson from www.creditcardz.in.

But, if you have a poor credit history there is a possibility of the acquiring bank lowering your credit limit.
Hiral Thanawala is a personal finance journalist with 8 years of reporting experience. Based in Mumbai, he covers financial planning, banking and fintech segments from personal finance team for Moneycontrol.
first published: Jul 20, 2021 08:58 am

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