Citi to refund $330 million in interest charges to cardholders

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Bank made errors in re-evaluating APRs for 1.75 million customers

Brady Porche

Staff Reporter
Focusing on credit scores and what consumers can do to improve them

 

Citi will return $330 million in interest charges to
millions of cardholders who resumed on-time payments after missing a due date.

The bank on Friday said it discovered errors in reviewing
and re-calculating interest rates for customers who made at least six
consecutive on-time payments after a slip-up – a requirement
under the CARD Act
. The $330 million in refunds will cover 1.75 million
card accounts that were affected between 2011 and 2017 – an average of $190 per
account.  

A provision of the CARD Act allows cardholders who miss
payments and get hit with penalty APRs to have their original rates restored
after sustained good behavior. Under the rule, the bank must review the
possibility of restoring your original APR after you make six consecutive on-time
payments under a penalty APR. It only applies when a higher interest rate is
imposed because a payment was 60 days late or more, and it doesn’t cover new
purchases.

“While we believed our methodology was sound, a periodic
internal review identified potential flaws in the methodology used to
reevaluate interest rates on some credit card accounts,” Liz Fogarty, head of
global consumer banking public affairs, said in a statement. “While we have
found no evidence of employee misconduct, we should have identified these
issues sooner.”

Fogarty also said about 90 percent of the interest rate
savings due to customers under the rule were delivered as required.

Citi gave no specific timeframe for doling out refunds –
Fogarty said the bank would move to reimburse affected customers “as quickly as
possible.”  

See related: Average card APR holds steady at 16.41 percent, Late payments on cards worsen as balances rise, N.Y. Fed says 




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