Citi to refund customers $335 million after failing to lower interest rates

The issue affected around 1.75 million U.S. credit-card accounts between 2011 and 2017

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Citigroup admitted it failed to lower interest rates for some credit-card customers as required by federal law and will distribute $335 million in refunds as a result.

Citigroup Inc., C, +0.21%   one of the largest U.S. credit-card issuers, said Friday that it failed to lower interest rates for some credit-card customers as required by federal law.

The bank said it plans to issue around $335 million in refunds to affected customers, or about $190 on average per affected account.

Citi said the issue stemmed from the bank increasing annual percentage rates on cards after customers missed payments as well as other reasons. The Credit Card Accountability Responsibility and Disclosure Act requires card issuers who increase rates to review those accounts every six months.

Issuers are then supposed to reduce the rate if the reason for the increase is no longer a problem. That could include, for example, a cardholder establishing a pattern of again paying their bill on time.

Citi said the issue affected around 1.75 million U.S. credit-card accounts over a period ranging from 2011 to 2017. Some of those accounts received smaller rate reductions than they should have, while others didn’t receive any reduction, the bank said. They included the bank’s regular credit cards, and co-branded cards that it has with merchants, and credit cards that can only be used at specific stores.

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https://www.marketwatch.com/story/citi-to-refund-customers-335-million-after-failing-to-lower-interest-rates-2018-02-23