(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