Citigroup has announced plans to refund a total of $335m to its US customers for whom annual percentage rate (APRs) should have been lower.
According to a securities filing, the bank found during an internal review that the method it has been using to calculate APRs has been incorrect.
The method was meant to decrease interest charges for cardholders who made timely payments after their APR was increased due to lapses. Such reduction in interest charges has been mandatory under the Credit Card Accountability Responsibility and Disclosure (CARD) Act of 2009.
In a press statement, Citigroup spokeswoman Liz Fogarty said: “Citi has semi-annually reviewed US credit card accounts that experienced an interest rate increase to identify those eligible for a rate reduction.
“A periodic internal review identified potential flaws in the methodology used to re-evaluate interest rates on some credit-card accounts.”
Around 1.75 million credit card accounts are reported to have been affected since 2011, and an average of approximately $190 per account is being refunded.
While Citigroup maintained 250 million accounts during the specific period and currently has only around 120 million accounts, the bank plans to make refund to even those customers who no longer hold an account.