Citigroup is preparing to issue $330 million in refunds after the bank discovered it had overcharged nearly 2 million credit card customers on their annual interest rates, a spokeswoman said Friday.
The bank, which has about 150 million credit card accounts, said it caught the error in a routine internal review mandated under federal law. Citigroup said it had notified regulators about the mistake.
"We sincerely apologize to our customers and are taking every action to provide refunds as quickly as possible," the bank spokeswoman, Elizabeth Fogarty, said in a statement.
Citigroup disclosed the error in its annual report, filed Friday with the Securities and Exchange Commission. The bank said it had discovered "methodological issues" in its calculations of some customers’ annual interest rates.
Fogarty said the average refund would be $190 and that 1.75 million customers ? roughly 1 of every 10 Citigroup credit card customers ? were affected.
Matt Schulz, a senior industry analyst at CreditCards.com, said it was rare to see a card company reveal a mistake of such magnitude.
"Two hundred dollars is a significant amount of money for an awful lot of people in this country," he said. "For this to have happened for almost 2 million accounts is a significant thing."
Citigroup discovered the error as it conducted a review required by the CARD Act, which took effect in 2011. The federal law, enacted after the 2008 financial crisis, requires credit card issuers to review the accounts of customers whose interest rates have risen after incidents like missed payments or bounced checks. Issuers must then determine whether the customers have improved their financial standing enough to qualify for lower rates.