Does DFAS or some level of DOD make interest payments to Citi bank on GTCCs?

2021-01-19T16:57:12-05:00

So Citi bank issues GTCC's to soldiers, who charge travel expenses to them, and the vouchers are submitted through DTS and the account gets paid off. But sometimes the cards carry a balance on them, and the soldier incurs no fee as long as the minimum payment is made. The soldier also doesn't pay any interest on the balance. Sure there is the occasional late fee, but that cant possibly produce enough revenue to justify the administrative cost that Citi incurs by running the program, let alone tying up all of that capital. If no one is paying interest on it than the government is just borrowing money for free, and even the treasury cant do that... So I guess my questions are:
1. Does some level of DoD or Government make interest payments to Citi on the total balance of all accounts and if so who?

2. If not, What is in it for Citi Bank? Is it 100% merchant fees and Late fees?

Response by MSG Gary Eckert made Jan 19 at 2021 5:08 PM

2021-01-19T17:08:36-05:00

Like most contracts, the Government pays for the administration of the credit card program. My guess would be that it is a fixed price contract. The only late fees the Government would liable for would be if they did not make those payments in a timely fashion. I am not sure about the individual travel cards but the impac cards used by organizations actually rebate a portion of the merchant fees to the Government similar to the cash back a person might receive from their credit card.

Response by Maj Marty Hogan made Jan 19 at 2021 5:08 PM

2021-01-19T17:08:39-05:00

Citi makes 3% (I believe it is still 3) on cash withdrawals- no longer reimbursable to the member. Businesses are also charged a normal 3% fee for accepting the card. There should never be a balance- or your command should step in and the member is charged interest. Not paying the entire balance after the TDY is required by the JFTR and the card statement you are required to sign to get one. I am curious to what leads you to believe that the service member is not charged for this?

Response by MAJ Ken Landgren made Jan 19 at 2021 6:13 PM

2021-01-19T18:13:07-05:00

The government is not borrowing funds. The government is essentially saying take that TDY we have the funds and will pay when the travel voucher is settled.

Response by LTC John Shaw made Jan 19 at 2021 6:38 PM

2021-01-19T18:38:39-05:00

Good article on the credit card industry and how they make money.
https://www.nerdwallet.com/article/credit-cards/credit-card-companies-money

How Do Credit Card Companies Make Money? - NerdWallet

The money comes from you in the form of fees and interest, and also from the merchants where you use your cards.

Response by Wayne Soares made Jan 19 at 2021 6:40 PM

2021-01-19T18:40:26-05:00

Thanks for the share Jacob

Response by CPT Private RallyPoint Member made Jan 20 at 2021 6:30 PM

2021-01-20T18:30:56-05:00

I spent 20 years in banking and investments before joining the USAR. I can assure you the individual soldier is the one that is getting screwed.
1) The Government has off set the entire cash flow process and expense reconciliation time line onto the shoulders of the service members.
2) Citi Bank is going to get all their fees paid them regardless of who they actually get it from. Getting payments to the GTC from the Government that are not otherwise spelled out in the properly approved vouchers is going to get eaten by the Service Member.

Read the fine print on the Credit Card terms. The GTC is the responsibility of the service member. It is not the liability of the Government. Read the conditions of the GTC counseling statement.

Citi is getting their money. The Government isn't paying for anything not preapproved on the vouchers.

GOD I HATE THESE CARDS!!!!!!!!!!
At the very least a GTC should NOT be the first credit card some young service members have. But we find ourselves in this situation because it's the easiest way to control and oversee potential abuses on a large scale.

I have seen too may people get screwed over on expenses like flight changes or car rentals that didn't finally get approved on the vouchers and they had to end up eating the costs, and carried balance interest while trying to work it out.

Likewise, I have seen more than a few idiots abuse the card thinking the Gov. is going to pay for it. WRONG!!!!!!!!!!!! There is no magical clearing house of funds zeroing out the outstanding balances and fees that randomly get charged outside of the DTS process.