Citigroup to Refund $335 Million in Credit Card Interest
Citigroup, one of the largest credit card issuers in the United States, will refund $335 million to customers who had been over-charged on their APR.
The company found the method they were using to calculate APRs was not accounting for positive cardholder behavior, such as making on-time payments. Currently, they are reviewing customer accounts and plan to mail refund checks in the second half of the year. On average, affected customers will receive a refund of $190.
In total, about 1.75 million accounts could have been affected by this error, which the company says only accounts for 10% of customers who had earned interest reductions. The lower interest rate was properly credited to the other 90% of accounts. From 2011 to 2017, these reviews saved cardholders $3 billion in interest charges.
“Citi has semiannually reviewed U.S. credit card accounts that experienced an interest rate increase to identify those eligible for a rate reduction,” spokeswoman Liz Fogarty said in a statement. “A periodic internal review identified potential flaws in the methodology used to reevaluate interest rates on some credit card accounts.”
The $335 million refund has already been factored into Citigroup’s 2017 earnings report.
If you are paying a high APR, but you have been making payments on-time and taking other steps to improve your credit score, such as paying down debt, you may want to call your credit card company and ask if they can lower your interest rate. While the 2009 Credit Card Accountability Responsibility and Disclosure (CARD) Act requires lenders to review accounts periodically, it does not hurt to take things into your own hands and request a better rate.