Citibank to Set Up Fund for Improper Late Fees

Citibank has agreed to set up an $18-million fund for cardholders who can show that they were improperly forced to pay late fees or finance charges, according to a proposed settlement of a class-action lawsuit filed in Los Angeles. Cardholders claimed Citibank assessed late fees on payments that arrived after 10 a.m. on the due date. Under the settlement--which must be approved by a federal judge next month--Citibank agreed not to charge late fees as long as payments are received before midnight on the due date. Average finance-charge refunds will be less than $1, according to the settlement. Customers who can show that their interest rates were hiked because of an inappropriately assessed late charge may recover more. Citibank is among several credit card issuers who have been hit with class-action lawsuits over their late-fee policies. Others include First USA and Providian Corp.