Citi introducing fees on low-balance bank accounts

Fri Sep 16, 2011 3:28pm EDT

The Citibank logo is seen at branch in Washington April 18, 2011. REUTERS/Larry Downing

The Citibank logo is seen at branch in Washington April 18, 2011.

Credit: Reuters/Larry Downing

Related Topics

(Reuters) - Citigroup Inc said it will start charging a monthly fee on accounts with low balances, joining a growing list of banks seeking to recoup revenue lost under new regulations.

The $10 fee will be waived if a customer completes one direct deposit and one online bill payment per month through an account, or maintains a combined balance of $1,500 in checking and savings accounts, Citigroup said on Friday.

The change takes effect in December.

Citi's change is part of a larger industry push toward regular maintenance fees for retail banking services, particularly for accounts with lower balances. Fees were previously tied to overdrafts and other customer missteps.

Under Citi's current fee structure, customers are not required to maintain minimum account balances but must complete five monthly transactions to avoid a fee of $8.

Citigroup said it will not charge for debit card use or online bill payment.

Stephen Troutner, head of banking products for Citi's U.S. consumer bank, said free debit card use could woo customers from other banks that are weighing whether to charge for debit card use, such as JPMorgan Chase & Co and Wells Fargo & Co.

"Customers have told us in no uncertain terms that is a huge source of irritation," Troutner said.

Some customers are growing weary of higher hurdles to avoid fees and are moving to credit unions and small banks that have not rolled out new fee programs, said Ed Mierzwinski, consumer research director at the Washington-based U.S. Public Interest Research Group.

"It's just harder to achieve free now," Mierzwinski said.

New York-based Citi is the latest bank to tinker with its fee structure following changes in U.S. consumer banking regulations and laws over the last two years.

New regulations -- part of a broad financial sector reform effort -- limit overdraft fees and other penalty fees banks can charge.

In response, many banks have begun introducing monthly service fees for accounts, debit card use and visits to branches.

Bank of America Corp, the largest U.S. bank by assets, added checking account fees last year. The BofA changes include an ebanking account, which allows customers to use ATMs and online banking for free but charges a monthly fee of $7 for teller visits or receiving paper statements.

(Reporting by Joe Rauch in Charlotte, N.C.; editing by John Wallace, Bernard Orr)

FILED UNDER:
We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
Comments (3)
cubop wrote:
Who uses banks anymore? Credit Unions are the only way to go. You own it.

Sep 16, 2011 11:04am EDT  --  Report as abuse
ThoseWhoServe wrote:
The giant bank response to bad management processes and executive actions that caused billion-dollar losses on their balance sheets is to penalize their bank customers who had nothing to do with the losses.

Since they can’t or won’t recoup the huge executive salaries and bonuses paid to the people who are responsible for the losses, they then lay off bank employees and increase customer fees.

Sep 16, 2011 2:10pm EDT  --  Report as abuse
breezinthru wrote:
Credit Unions are looking better and better all the time.

Sep 21, 2011 2:04pm EDT  --  Report as abuse
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.