Citibank’s ‘misleading’ 6.9 per cent personal loan ads referred to financial watchdog

Frank Chung

IF YOU’RE prone to watching the advertorials in between segments on breakfast television, you may have caught this classic exchange between Jamie and Marnie on Seven’s The Morning Show.

Jamie: “I’ve always wanted to see the penguins in the Arctic. It’s Arctic, isn’t it?”

Marnie: “No it’s Antarctica.”

Jamie: “I think it’s Arctic. No — it’d be warmer up north. Should go to Phillip Island, see them there instead.”

It’s all downhill from there, as Marnie goes on to inform the viewers about the benefits of Citibank’s “super low rate” 6.9 per cent Ready Credit Flexible Personal Loan, which the lender has been advertising heavily in recent months.

The three important things you need to know? “One, it has a super low rate of just 6.9 per cent per annum,” says Marnie. “Two, it can last for three years, and three, it’s super flexible.”

Sandra, 48, an aged care worker from rural Victoria, said she saw the ads while home sick from work and decided to take out a $10,000 loan to fix up her motorbike.

She says when she phoned up to find out more, the customer service representative was “push, push, push”.

“From the word go he was insistent on getting my info for pre-approval, and I was trying to ask about early payouts and interest rates,” she said.

“He mentioned something about borrowing 80 per cent of the loan and the other 20 per cent goes on a credit card or something, I couldn’t get the gist of what he meant. I said I just want to borrow the $10,000 as a lump sum, can I do that? And he said no, you can’t.”

While the ads make clear that after three years, any remaining balance reverts to the standard variable rate of 19.49 per cent, the fine print of the deal is that the borrower can only borrow 80 per cent of the loan value — up to a maximum of $48,000 — at the 6.9 per cent interest rate.

The remaining 20 per cent must be paid back at 19.49 per cent.

Citibank also reserves the right to cancel the borrower’s fixed payment option. “If it is cancelled, the full outstanding balance of your Fixed Payment Option will also revert to the standard variable rate,” the terms and conditions state.

Read on.

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