Citibank Clipping Wings of Cardholders

It’s getting harder for Citibank credit card customers to earn freebies on American Airlines.

Effective Jan. 1, the bank will cap mileage points earned with Citibank AAdvantage Visa or MasterCard at 60,000 a year. There is currently no limit.

Cardholders earn one mileage point for every $1 charged on the credit card. The mileage points can be used to get free tickets or upgrades on American.

A Citibank spokeswoman said the limit was a “business decision” affecting a small number of cardholders. American’s best customers--people who fly more than 25,000 miles a year--are exempt from the limit, she said.

Observers speculated that American found it was giving free tickets to small-business owners who aren’t big customers. They earned free tickets by putting business expenses on the card and racking up mileage credits.

Ironically, Citibank’s move comes as other airline card issuers are dropping limits to encourage people to use them more, analysts said.

Last month, for example, Nationsbank dropped limits on a card that allows users to earn mileage points on USAir.

“We expect other card issuers to follow USAir and do the same thing,” said Chuck Gale, an analyst at Frequent, a publication that reports on frequent-flier programs. He said Citibank’s move is “counter-trend.”

Citibank AAdvantage cardholders unhappy with the limit should watch their mail. The bank is offering some of its AAdvantage cardholders a new gold version of the Visa and MasterCard AAdvantage card with a 100,000 annual mileage point limit.

There’s a catch, though. The new gold card has an annual fee of $85. The current card has a $50 fee.

*

Finding Loopholes: “The Ultimate Loophole!” proclaims an advertisement for CA-Simply Tax, a computer program that helps users prepare taxes. From now until April 15, Computer Associates International says it will give the program free to anyone calling its toll-free number--”a free tax break,” the company calls it.

So why are people who call to order the free computer program asked to provide their credit card numbers? Because to get this free program, you first must pay a shipping and handling charge of $9.95.

Could this be the ultimate loophole?

*

Bounced-Check Fees: The average fee that banks charge checking account customers for bounced checks is up 4% from last year, to $19.35, a nationwide survey shows.

The survey, conducted by Bank Rate Monitor, a trade publication, shows that penalties for bounced checks range from $10 to $30. The lowest fees in the country are in California, where banks were sued over excessive fees in the 1980s.

The survey shows that California’s largest banks and savings institutions charge between $10 and $12 for bounced checks. Bank of America, among the institutions sued a decade ago, charges $10 for bounced checks, the same penalty it assessed in 1987.

Robert Heady, publisher of the West Palm Beach, Fla.-based Bank Rate Monitor, said banks raised fees to boost their profits on bounced checks.

John Hall, a spokesman for the American Bankers Assn., said banks raised the fees primarily to discourage people from bouncing checks. However, he acknowledged that banks probably make a profit on the fees.

*

Taken to the Cleaners: Hundreds of restaurants around the country, from New York’s upscale Tavern on the Green to Blimpie submarine-sandwich franchises, have received letters from a Michael Fitzpatrick demanding $17 to cover dry-cleaning costs because a waiter spilled food on his three-piece suit. Alleging fraud, U.S. postal inspectors seized the mail at Fitzpatrick’s New York address, which included 300 checks from restaurants.

Authorities are returning the checks. They haven’t yet tracked down Fitzpatrick.