If you are a Citigroup card holder, you may be entitled to roughly $190. On Friday, Citi reported with its annual filing to the Securities and Exchange Commission that it has failed to lower interest rates for some credit card holders and $335 million will be reissued. This bank is one of the largest credit card issuers in the US and apprehended the issue after an internal review. The issue is stemmed from their methodology to lower interest rates in return for good behavior by its customers. Credit card issuers are required to semi-annually review accounts to determine interest rate increase or decrease based on payment. If a card holder has been late for two consecutive payments, then the issuer can increase the interest rate. On the other hand, if a card holder has made timely, minimum payments for six months, then the holder is eligible for an interest rate reduction. This eligibility criterion was established by the Credit Card Accountability, Responsibility, and Disclosure Act of 2009, also known as the CARD Act. The bank recently discovered a weakness in its detection for eligible accounts and decided to examine accounts since the CARD Act went into effect in 2011. After investigation, it had revealed that half of the impacted accounts received reductions, and the other half did not. It is estimated about 1.75 million (10%) accounts were overcharged.

Although Citigroup had overcharged its customers, the bank handled the situation rather well. It is important to note that the bank had realized a potential flaw to its system, notified its regulators, and conducted an internal review. Upon discovery, it notified the SEC and the public of their mistake. Furthermore, in its statement on Friday, a Citi spokesperson stated that there has been no evidence of employee misconduct, but the issue should have been identified sooner.  Some of the affected customers include both current and noncurrent customers, but the refunds average to about $190 an account. Citigroup will redistribute the appropriate funds some time in the second half of the year. This redistribution will have little effect on Citi itself, as the stock (C) climbed almost 1% on Friday and is up about half a percent in intraday trading on Monday. The credit card division, itself, has generated over $100 billion in revenue since 2011 and stands out from its competitors through its promotional discount rates. Though a $190 will not have a profound effect to certain customers, customers living from paycheck to paycheck will be greatly affected as they receive refunds. The refunds and the swift, initiative manner in which Citigroup handled this mishap is reasonable. When running your own business, you must be aware of the risks and possibilities of your operations. It is important to forecast a few scenarios for your business model because there are risks that can deter maximum profitability and efficiency. It is also imperative to be prepared for these economic circumstances and to handle the situation with care.