citi simplicity card has higher interest rates After 18 month

Citi bank has a new card, called "Simplicity", which it thinks has terms that will attract a lot of new customers. On the surface, the new citi simplicity card looks great, but in my opinion there are much better options out there.

The card will have no annual fees, no interest on purchases and transfers for 18 months, and no late fees. This all sounds great, but the good times will only last you for 18 months.

After the 18 month period is over, the interest rate on the cards will be less competitive than other cards out there, running somewhere between 13 percent and 22 percent depending on your credit score.

Another big disadvantage to the card is that there is no reward program attached. Consumers that do not take advantage of reward programs are giving away free money. Some reward programs are worthless, but there are some great reward programs out there that offer everything from cash back to airline miles.

The not-having late fees is nice, but if that is the main selling point for you, you probably shouldn't be getting another credit card in the first place.

In an ideal world, we could all pay off our total balance every month, but this is not an ideal world. Things come up, and there is nothing wrong with carrying a balance as long as you make payments each month. But these are not the type of people that Citi wants to target with these cards. It wants people that charge a lot, and then pay their minimum payments each month.

Citi is banking on finding customers that will be carrying a big balance when their 18 month introductory period ends, and then the above average interest rates will more than make up for the interest it didn't charge during the first 18 months.

Citibank claims that the new offering is designed to help people responsibly manage their finances, but I believe it is really an attempt to lure in people to carry bigger balances. The recent recession resulted in better card management by consumers, and this has had a negative impact on credit-card revenues at banks. Citi's card operations have experienced a three percent drop in revenues over the last six months, and I believe it is hoping this new card will help change that trend.

Lured in by the 0% interest rate on purchases, people are much more likely to run up big balances, and then get left facing the high interest rates down the road when their balances are too high to pay off.

The best way to take advantage of this offer would be to use the card for 18 months, and then transfer your balance to a lower interest rate card after your introductory period ends. There are much better offers out there, so be aware of them before you carry a high balance at a high interest rate.