Some Citi cardholders just have a payday.
The tax office for consumer protection announced on Friday a comparison with Citibank
C, + 0.06%
after discovering that Citi violated the Truth in Lending Act.
Nearly 2 million Citi cardholders receive an average refund of $ 190 each under the terms of the agreement, Citi said in a statement. Citi will have to hand over $ 335 million to customers.
Citi has violated the Truth in Lending Act by not revaluating and reducing the annual percentages (APRs) to approximately 1
Since Citi did not, some cardholders paid more interest than they should, the bureau said.
The scheme applies to cardholders with a number of Citi cards.
Citi will not have to pay fines to the Bureau in addition to consumer reimbursement because Citibank has identified and reported its violations to the Bureau and has initiated repayment to consumers, the bureau said.
"Citi is pleased The matter has been resolved by the Bureau and we sincerely wish to thank our customers for not resolving these issues earlier," Citi said in a statement.
Affected customers are automatically reimbursed and do not need to take any action, said a spokeswoman for Citi. Citi has already reimbursed some consumers and will continue to send repayments by the end of the year.
Cardholders who have defaulted should pay special attention to the APR of their cards, said Matt Schulz, a senior industry analyst on CreditCards.com. Companies are legally entitled to increase the card rates as "penalty rates" for customers who have been late in their payments. But after six months, the card issuer must reassess its status and performance in accordance with the credit card law.
"If you are good with your business, you have a good chance that this penalty will be reversed after about six months," Schulz said. "It's up to you to make sure that if you have not seen this change, you can contact your card issuer and say," I did what I had to do. "
Of course it is better not to make a late payment in the first place, he said. Cardholders can avoid this by setting up automatic payments or receiving text or e-mail alerts when their payments are due.