A class action alleges that Citibank used "hyper-technical and misleading payment-credit guidelines" to trick bankcard holders into late payment penalties.

According to the suit, Citibank set a deadline of 10:00 a.m. for processing payments. Payments received after that were credited the next day, the suit said, meaning many whose payments were received on the due date were deemed to be late. Those who missed the deadline were charged a $29 fee, or higher annual interest rates, the suit said.

Citibank spokeswoman Maria Mendler said the bank has not yet received a copy of the suit, but added, "in order to maximize our payment-processing capacity and control, Citibank has had a 10:00 a.m. deadline in place for many years."

"Citibank's due-date cutoff time is clearly stated on the payment coupon and these payment processes and communication to customers are specifically authorized by federal law," Ms. Mendler said.

Class actions against credit-card issuers over late fees and other penalties are a growing trend. Another Citigroup subsidiary, Travelers Bank, was accused in March in Delaware Superior Court of charging higher interest rates than promised on balance transfers. Other large issuers such as Bank One Corp.'s First USA and Providian Financial Corp. have been accused of similar practices.

The Citibank lawsuit, which seeks class-action status, was filed by three law firms on Oct. 1 in Texas Eastern District Federal Court on behalf of Willi Jo Jimmerson, a Citibank Visa cardholder. -- Miriam Kreinin Souccar

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