Bank Error Not in Your Favor: Citi Overcharged Interest on 1.75 Million Credit Card Accounts
While TPG implores readers not to carry balances on their travel rewards credit cards — the interest charges surely negate any rewards you'll earn — the reality is that tens of millions of Americans carry a credit card balance. And if you've carried a balance on a Citi credit card, the bank might owe you a refund for overcharging the interest on your account.
Citi unveiled in a filing Friday that it discovered "methodological issues" in the calculation of interest on approximately 1.75 million of the bank's 150 million credit card accounts. Citi will be paying approximately $330 million in refunds from the error, meaning that the average refund amount is nearly $190 per affected account.
The issue specifically concerns cardholders that have missed two or more payments, which triggers a higher penalty interest. Once these cardholders have made payments on time for six straight months, they're legally eligible for an interest rate reduction. Half of the 1.75 million affected Citi accounts received no interest rate reduction. The other half received a partial reduction, but the interest rate wasn't lowered enough.
In a statement to the New York Times, a Citi spokesperson noted that the bank is "taking every action to provide refunds as quickly as possible." CNN Money reports that the $330 million in refunds includes interest on the overcharged amounts. However, it's unclear how the bank calculated the amount of interest to pay cardholders on the erroneously charged amounts.
The issue was caught by Citi during a routine internal review required by the Credit Card Accountability Responsibility and Disclosure Act (CARD Act). The customer-protection bill is estimated to have saved credit cardholders over $16 billion in fees during the period when it took effect in 2011 through the end of 2014.
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| 2X miles | 2 miles per dollar on every purchase |
| 5X miles | 5 miles per dollar on flights and vacation rentals booked through Capital One Business Travel |
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Intro Offer
Earn 200K miles when you spend $30K in the first 3 months, and an additional 200K miles when you spend $150K in the first 6 monthsLIMITED-TIME OFFER: Earn up to 400K bonus milesAnnual Fee
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Why We Chose It
The Capital One Venture X Business Card has all the Capital One Venture X Rewards Credit Card has to offer and more. It offers an incredible welcome bonus and requires an equally impressive spend to qualify. In addition, the card comes with premium travel perks like annual travel credit. (Partner offer)Pros
- The Capital One Venture X business card has a very lucrative welcome offer.
- In addition, the card comes with many premium travel perks such as an annual $300 credit for bookings through Capital One Business Travel.
- Business owners are also able to add employee cards for free.
Cons
- The card requires significant spending to earn the welcome offer.
- Another drawback is that the annual travel credit can only be used on bookings made through Capital One Business Travel.
- LIMITED-TIME OFFER: Earn up to 400K bonus miles: 200K miles when you spend $30K in the first 3 months, and an additional 200k miles when you spend $150k in the first 6 months
- Earn unlimited 2X miles on every purchase, everywhere—with no limits or category restrictions
- Earn 10X miles on hotels and rental cars and 5X miles on flights and vacation rentals booked through Capital One Business Travel
- With no preset spending limit, enjoy big purchasing power that adapts so you can spend more and earn more rewards
- Empower your teams to make business purchases while earning rewards on their transactions, with free employee and virtual cards. Plus, automatically sync your transaction data with your accounting software and pay your vendors with ease
- Redeem your miles on flights, hotels and more. Plus, transfer your miles to any of the 15+ travel loyalty programs
- Every year, you'll get 10,000 bonus miles after your account anniversary date. Plus, receive an annual $300 credit for bookings made through Capital One Business Travel
- Receive up to a $120 credit for Global Entry or TSA PreCheck®. Enjoy access to 1,300+ airport lounges worldwide, including Capital One Lounge locations and Priority Pass™ lounges, after enrollment
- Enjoy a $100 experience credit and other premium benefits with every hotel and vacation rental booked from the Premier Collection
- This is a pay-in-full card, so your balance is due in full every month