Citigroup Inc., one of the world’s largest credit-card issuers, said it will refund $335 million to U.S. customers whose annual percentage rate should have been lower.
The lender determined that a method it was using to calculate APRs didn’t properly reflect the full benefit customers should have received for good behavior, such as paying on time, the New York-based bank said Friday in a securities filing that disclosed the issue and the total cost. It’s currently reviewing accounts and plans to have refund checks in the mail by the second half of the year.
The Credit Card Accountability Responsibility and Disclosure (CARD) Act of 2009 requires lenders to periodically review accounts whose APR had been raised to see if subsequent good behavior makes them eligible for a rate reduction. From 2011 to 2017, the bank delivered $3 billion in savings through such reviews. That was about 90 percent of what customers should have received.
“Citi has semi-annually 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.”
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