As much of the country shudders under frosty winter temperatures, the credit card industry has also cooled off. It’s been a quiet week, but there are a few credit card tidbits worth highlighting, including news that Citi will give some cardholders additional refunds years after an interest rate blunder, another month of declining card debt, and Southwest card bonus boosts that benefit travel buddies.
This weekly credit card news roundup contains what you should know about the cards in your wallet, other available offers, and new product announcements or reports that made us stop watching Zoom Kitten for the umpteenth time.
What’s the Lowdown?
Here’s what caught our attention between Feb. 5 and Feb. 11, 2021:
Citi Makes More Financial Amends With Overcharged Cardholders
Citigroup Inc. (better known as Citibank or Citi) has agreed to refund some cardholders an extra $4.2 million as further repayment for unlawful interest charges several years back.
Let’s quickly recap the earlier issue: During a 2016 in-house compliance review, Citi discovered that some card accounts weren’t getting properly reviewed to see if they qualified for APR reductions under the Truth in Lending Act (which protects consumers from excessive fee and interest rate charges, including penalty APRs that are applied to accounts for too long). Kudos to the bank for self-reporting the matter to the Consumer Financial Protection Bureau (CFPB) after the review, but the error impacted about 1.75 million accounts and cost cardholders a whopping $335 million in excess interest charges, according to the CFPB. Oof.
Citi settled with the CFPB, issued refunds to impacted cardholders, and revisited its account review process, but attorneys general from five states—Pennsylvania, Iowa, Massachusetts, New Jersey, and North Carolina—pushed for further compensation, which is what led to the additional settlements announced this week.
“Citi has voluntarily signed an agreement with five states totaling $4.2 million in which the states will provide certain consumers with payments related to this legacy issue,” Citi told The Balance via email Thursday. “The states will administer and distribute payments at their discretion. While Citi denies violating the states’ consumer protection laws, we are pleased to put this matter behind us.”
As Citi mentioned, cardholders impacted by the additional settlement don’t need to do anything to get their portion of the latest payout. If you’re eligible, you’ll get a check by mid-year from a settlement administrator, not Citi, according to statements from each state attorneys general.
Consumers Backpedaled Card Balances by 11.2% Last Year
The U.S. revolving debt balance, which is largely made up of credit card debt, dropped a considerable 11.2% in 2020, according to initial findings in the latest Federal Reserve consumer credit report. To put that in perspective, the nation’s revolving debt balance has increased annually for nearly a decade.
Consumer card debt is now at the lowest point in more than three years, and down $122.8 billion from an all-time high of $1.098 trillion recorded in February 2020 just before the coronavirus pandemic began. These figures are not surprising, but the new Fed report reaffirms that credit card spending has been lower while other economic statistics (such as unemployment insurance claims) continue to show that many Americans have been struggling financially.
What Else Is Happening?
- Southwest Card Bonuses Now Benefit Travel Buddies: It’s now a lot easier to earn a Southwest Airlines companion pass if you open a Southwest Rapid Rewards Plus, Priority, or Premier credit card. New cardholders who spend $5,000 in the first three months can now earn a bonus of 30,000 points plus a companion pass good through February 2022. This is a great addition to the card offers, given that the Southwest Rapid Rewards program typically requires members to earn 125,000 points in a calendar year before they are awarded a year-long companion pass.
- Amazon Aficionados May Be Blue About This Offer Update: American Express has wiped the “20% back on Amazon purchases” from the Amex Blue Cash Everyday Card welcome offer, meaning Amazon purchases now earn the card’s base rewards rate of just 1% back. This card is now giving a $200 bonus to cardholders who spend $1,000 within three months of opening an account, which is a pretty typical bonus for a no-annual-fee cash-back card, albeit a bit less than the card’s previous offer.
- Amex Doubles Business Gold Card Bonus: If you’re a small-business owner in the market for a new rewards card, the American Express Gold Business Card now offers a beefy bonus: 70,000 Membership Rewards points for those who spend $10,000 within three months of opening an account and up to $300 back in statement credits on some common biz expenses, like shipping. Based on our calculation of Membership Reward point values, the bonus points alone are worth $798, on average.