Sunday, December 23, 2007

Shell Citibank Credit Card - A Cash Draining Card (Malaysia)

Are you fancy of getting a credit card that offers 5% rebate on shell
petrol and 1.5% rebate on other purchases?

If your answer is yes, then yo! u 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

Shell Citibank
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

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 kills you, but the Citi-Shell
card will.


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