How’s this for a bank stepping up and taking responsibility when they wrong customers?
If you have a Citi credit card, you could be due part of a $335 million refund later in 2018!
$190 average refund coming
Citigroup has fessed up to using improper methodology to reduce interest rates on users who were temporarily put into a penalty box with higher rates because of missed payments.
Under the CARD Act, banks are required to reduce penalty interest rates when a delinquent cardholder begins making timely payments again.
An internal company review at Citi revealed that’s what happened for 90% of their customers who resumed paying on time after being delinquent.
But in 10% of the cases, Citi continued charging cardholders higher penalties even when they were once again paying on time as agreed.
Approximately 1.75 million credit card accounts were affected by the improper methodology used to tabulate the interest dating back to 2011, which is when the CARD Act went into effect.
That’s resulted in an announcement about a $335 million refund. Reuters reports that works out to be $190 per account for affected cardholders.
Citi says refunds are expected to begin later this year.
You’ve got to reduce credit card interest in your life!
If you’re buried deep in credit card debt, paying more than the minimum payment each month is one of the best ways to reduce the total amount of interest you pay over the life of a card.
Another option is to do a balance transfer to a card that has a 0% interest APR for a set number of months and get that debt paid off during that window of opportunity.
But before you make any decision about how to attack your debt, look for this box the next time you get your credit card statement. It contains some sobering info:
Pay attention to the spread between making the minimum payment, which will keep you in debt for 25 years, and making a higher monthly payment, which could result in you getting out of debt in as little as 36 months.
It amounts to a $7,000 difference!
One little-known way to reduce the interest you pay to the credit card company is to make 13 payments in 12 months. To do this, you’ll need to make a half-payment every 14 days to the credit card company.
Try marking your calendar every 14 days and writing that check or sending in your online payment that day. You’ll likely need to work these payments around your statement cycle to avoid paying late fees. But by making a half-payment every 14 days, you make one extra month’s payment over the course of the year.
Incidentally, this advice is the same logic behind a biweekly mortgage plan. When you add one-twelfth extra that goes toward the premium on your monthly mortgage payment, you achieve the same effect you would if you hired a third party to set up a biweekly plan for you!