Maybe someone can put my mind at ease OR nudge me into invoking my right to cancel. I've signed for a HEL from Citibank. There is something that concerns me on the Truth in Lending Disclosure regarding prepayment. I don't trust Citibank based on past experience. Someone please help with this one... Under PREPAYMENT it says: If you pay off your loan early, you
( )may (x)will not have to pay a prepayment penalty
( )may (x)will not have to pay a minimun finance charge
( )may (x)will not be entitled to a refund of part of the finance charge. The last clause is the one that concerns me! The "Finance Charge", as listed on a Truth in Lending Disclosure, is the total finance charge if the loan is paid off over the scheduled 30 year period (an amount that exceeds the loan amount). Does this mean that they can charge me the entire finance charge if I pay off the loan early? If not, what does it mean and why is it there at all? Obviously I'm not going to get a refund for finance charges accrued while the loan is actually financed, right? It sounds as if they could charge me the $42k interest, same as if I took 30 yrs to pay, on the $25k loan, even if I prepay before the 30 year term. If true, that is not acceptable. I hope I explained this clearly enough. I also hope I don't sound too stupid or paranoid but, as I said, Citibank and I have a history which I will put below as optional reading and which made me very mistrustful of them. Any clarification or suggestions would be appreciated! Optional Reading: Why I don't trust Citibank enough to ask them for clarification.
A few years ago I received an offer to transfer my credit card balances to a "non-introductary low fixed rate" citibank Visa. I did just that. About 7 months later I noticed that the interest rate had increased significantly. I called and said there must be a mistake because I signed on for a fixed rate. The CSR agreed that I had a fixed rate but that citibank had RAISED the fixed rate. I said "that's not my definition of a fixed rate". She said a variable rate is tied to an indicator like the prime rate, that my rate is a fixed rate and that they decided to raise my fixed rate to remain competetive! She said that if I read the small print, that I would see that they are allowed to raise my fixed rate after 6 months. That whole thing just burned me up, especially when she said that they had to raise my rate to stay competitive. What a scam! | 