Citibank To Charge Fees On Checking Accounts

If you’re a Citibank customer who has one of the bank’s two smaller checking account plans—the ones where the monthly fee is waived as long as you use direct deposit or their online bill payment—then maybe it’s time to consider taking your business elsewhere. Starting in February, anyone with an average balance of less than $1500 will be assessed a monthly $7.50 service fee, reports the New York Post.

Penny-pinching Citibank will put the squeeze on small-fry customers, charging them up to $90 a year by demanding a fee every time their average monthly checking account balance sinks below $1,500.

Starting in February, Citibank will no longer automatically waive its $7.50 monthly fee for its “EZ” and “Access” checking-account holders who make either a direct deposit, or two bill payments online monthly.

A management consultant told the Post that if customers stay with Citibank even after they implement the new fee rule, it will send a signal to other banks that they can do the same with low-balance checking account customers. Hmm, maybe it’s time to start looking around for a good credit union?

“Really Citi treatment” [New York Post] (Thanks to Kearas!)
(Photo: Mike McCaffrey)

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  1. TechnoDestructo says:

    I saw the headline and thought…what, 20, 40 bucks a year?

    God DAMN.

    They’re really serious about this “we’re only serving rich people now” thing, aren’t they?

    Along with every other non fast-food non-Walmart business in the US, apparently.

  2. mbz32190 says:

    How nice of them to take “our” (government) money and then charge the people who contributed to that bailout, the most. Good thing I never opened an account there when they opened a bunch of branches near me.

    • NeverLetMeDown says:

      @mbz32190:

      Low-end checking account customers didn’t contribute meaningfully to the bailout. Upper-income taxpayers (who typically have more than $1500 in their checking accounts pay the vast bulk of income taxes.

      • AngryK9 says:

        @NeverLetMeDown: And you know this for a fact. You have the numbers to back it up.

        • Cant_stop_the_rock says:

          @AngryK9:

          [money.cnn.com]

          47% of households pay no federal income tax, so it seems pretty likely that most people who have an average daily balance of less than $1500 pay little or no federal income tax. The top 5% pay more than 50% of federal income taxes.

        • NeverLetMeDown says:

          @AngryK9:

          Yes, I do. The top 20% of earners receive 53% of the income, and pay 67% of all federal taxes (including payroll taxes). The bottom 40% of earners receive 12% of income, and pay about 3% of taxes.

          [www.taxpolicycenter.org]

          • AnthonyC says:

            @NeverLetMeDown:
            All good numbers.

            One thing, though- the bailout wasn’t paid for with taxes- not yet, anyway. It was paid for through borrowing. It will ultimately be paid for either through tax increases or budget cuts. If taxes rise, it will likely be on wealthier Americans- they can more easily absorb the change, and more importantly, taxes on high incomes are at historical (and global) lows. But if budgets are cut, the burden will be on lower-income people who benefit most from the programs being cut.

            My prediction is on the former- not because it is the logical thing to do (though it is) but because high-income people represent a smaller share of voters.

      • Antiks says:

        @NeverLetMeDown: @NeverLetMeDown: Another BS post.

  3. TheOtherBob says:

    It’s hard finding a truly good bank — all banks have flaws these days. But there are degrees of bad. There’s “kinda bad at customer service sometimes” bad, which is most banks — not perfect, but generally make at least some effort.

    Then there’s “absolutely hate our customers and hope they die” bad…which is Citibank these days. I have to think that they’ve figured out some way to profit from going bankrupt — because they’re absolutely bleeding customers, and at this point it seems practically intentional.

  4. frank64 says:

    30% credit card rates and $90 checking accounts. What an expensive bank! There are so many better, cheaper options.

  5. Deezul_AwT says:

    Time to find a credit union in your area.

  6. Quatre707 says:

    I don’t get it. Why would they expect people to pay a fee to use their services, when the competition does it for free?

    • TuxthePenguin says:

      @Quatre707: Because not everyone will leave for the competition. All that bill pay, autopayments, etc.

      That… and they expect their competition to begin doing it as well.

    • fs2k2isfun says:

      @Quatre707: Also convenience. If you are in an area with a lot of Citi branches/ATMs, the convenience might be worth the extra few dollars a month.

  7. sonneillon says:

    1500 dollars? That is silly, I do not get dinged a fee unless I overdraft. I think the minimum my account has to be is 5 dollars. I have a credit union account too and that also has a minimum of 5 dollars.

    1500 dollars is ridiculous.

    • XTC46 says:

      @sonneillon: And where do you expect the bank to get money to operate if you keep $5 in the bank?

      Do you think managing your money is free? Do you think the teller’s time is free? Do you think they can collect enough interest on $5 to make it worth keeping you as a customer?

      • EdnaLegume says:

        @xtc46 – thinksmarter on twitter: what about the personal and auto and home loans they offer, the credit card accounts they provide, the OTHER banking services they offer… etc. you think banks run on checking accounts alone? lol

        • NYGuy1976 says:

          @EdnaLegume: What about all the customers who default on said credit cards, home loans, etc. Maybe the bank realizes customers who keep very low balances are more likely to default on any credit products they have.

  8. bones11 says:

    I can’t believe more people don’t have an account at a credit union. Honestly, what good are big banks? I learned when I was 13 what terrible things banks do and never again will I do my business with one. Had an account with First Security, which was taken over by Wells Fargo. I would put all my allowance and babysitting money in to it, at one point in time they started charging fees to people who only had savings accounts and after two months of that I took all my money out (a whole $300) and opened an account at my credit union. Better rates, they care more about my business, they haven’t messed anything up, free checks (only used for rent), free overdraft protection account, the list goes on.

    Something crazy I had one of my customers point out to me the other day, he just moved here from Florida, goes through Bank of America. Anyways, I guess there are 0 BofA’s in Utah. Never knew that until Friday. I guess they don’t consider Utah part of America and quite honestly I hope they keep their bank out of this state, we don’t need their “services.”

  9. dbshaw says:

    Thanks for the tip, closing my account at citi.

  10. Schmeeky says:

    If you aren’t eligible for a credit union or their branch locations aren’t convenient enough then look at community banks as well. Even smaller for-profit banks can beat the big megabanks at their own game.

    And if you don’t need paper checks or statements, ING’s electronic checking account is pretty nice as well.

  11. zacox says:

    I hate to say I told you so. But, I told you so. :(

  12. NYGuy1976 says:

    Free checking was never gonna last at the big banks for small customers. Having thousands of branches and thousands of ATM’s costs a lot of money. I am sure they don’t care if small accounts leave. The truth is, a small account customer who never overdrafts or accumulates fees actually costs the bank money.

    • vastrightwing says:

      @NYGuy1976: FREE checking is not free. There are a ton of fees banks charge that make “Free” checking not so free. ATMS are a lot cheaper than employees and tellers. An ATM has a one time charge, but works cheap, has no benefits and is tossed away when its services are no longer required. Are you kidding? Banks profit on over drafts and returned checks. Banks have a totally automated system for processing checks and maintaining accounts. They profit handsomely when “small” customers cause fees. I’ll venture to say most banks make most of their profit from small account holders who bounce checks and overdraw their accounts. Account fees are gravy on top of the fees. Fees are the bank’s business model. They attract customers initially with “free” accounts that switch to not so free accounts after they have critical mass. My bank has done this to me many times: “Free” savings account with only $250 balance. Oops! Today the minimum balance is $500! Please pay $5/mo. thank you for your business.

      • KnightoftheVoid says:

        @vastrightwing:

        Not quite true, ATMs run on electricity, have paper rolls and ink ribbons that need re-ordering / replacing, are run by computers that need maintenance, require refilling, require surveillance, occasionally need service calls from the corporations that set them up (Diebold and the like), and require balancing to resolve disputes. They’re far from a ‘one time charge’.

  13. pinkbunnyslippers says:

    Ugh – I’m thisclose to taking all my money out of everywhere and hiding it under my mattress.

  14. SadSam says:

    Putting aside the bail out issue, can a bank make enough money off a customer with free checking account, who never overdrafts or incurs ATM fees, etc. just by the float?

    If not, then the imposition of a monthly fee makes sense, will they refund the monthly fee if the customer racks up enough fees?

  15. Snarkysnake says:

    Ready for some even more painful news? I thought so.

    You folks that have pointed out that these jokers took governmnent bailout $$$ – Give yourself a gold star. But want to know the hell of it all ? Here goes:

    Citi and other big banks took all that bailout sugar and were supposed to use our money to repair the damage on their balance sheet and begin lending again. That in turn would jump start the economy and get things back to “normal”.

    But no. These banks are not only NOT lending , they are putting the money in risk free government treasury bonds and pocketing the spread between what they paid for the money ($0) and what they earn on the bonds (vairies ,but around 2- 2/12 % on average)

    Now. 2 1/2% doesn’t sound like much…UNTIL you realize that a return on assets at a bank in “normal” times is considered pretty good at 1% wildy good at 1 1/2%. It’s plain and simple stealing what Citi is doing here.

    Remember this when the next meltdown occurs.

  16. OldGreyTroll says:

    I got my “You’re not filling our coffers fast enough, go away!” letter from Citi today on my airline-affiliated credit card. 24% interest unless I go $3000 deeper into debt with them. (and pay them 3% balance transfer fee on it).

    I’ll be closing this card down tomorrow.

  17. H3ion says:

    Some banks will give you free checking with no minimum balance if you have some other account with the bank, like a savings account, home mortgage or home equity loan, or auto loan. It may be worth looking into. I try to keep the bare minimum in checking because the interest rate on checking deposits is pathetic.

  18. t0ph says:

    I pay $3 a month for my checking account @ TD Bank, and there is no minimum balance, and I can write up to 8 checks per month. I actually opted for that one over another they had which was free but then starts charging $15(!) a month after a year if you fall below x ($100 I think). I don’t mind paying $3, I feel it is a fair price to service my account. $5, $10 or $15 is crazy, and so is the $1500 min balance Citi is imposing.

    My mother lives on a fixed income from disability and I know how each and every little charges matters ALOT. This news is too bad for those that do not have many banking options.

  19. CentralServices says:

    Remember how City Wok from South Park was pronounced by the owner? That definately applies here.

  20. Ssscorpion says:

    Google “2009 Retail Banking Satisfaction Study” and “JD Power and Associates.” They list the bank in each area of the country that ranks highest in customer satisfaction.

  21. AHepburnGuy says:

    Jesus. Since when did “fees” become the new sheriff in town? Phone fees, bag fees, ETFs, now checking account fees? I almost want them to raise the base price of everything just so I never have to hear the word fee again!

  22. NewsMuncher says:

    I thought that people put their money in banks as an “investment” – the bank is taking your money and using it – they use it to make loans to other customers. This is why you are paid interest on your money that you placed in the hands of the bank. The idea is that the bank makes money off of the loans and other financial products they offer to other customers using your money as the material from which their financial products are made.
    So how does it make sense that I should pay the bank to lend them money that they use to lend to other people without giving me a share of the interest of the money being lent to other people?
    Or is this not how it works anymore? In which case I ask, where is the bank getting the money they lend to other customers?

  23. girl_scientist says:

    Makes me even happier that we closed our citi checking account last year. Now we bank at a credit union and get 4.5% interest. Credit unions rock!

  24. Al Swearengen says:

    Let’s just cut out the middleman already and just start Google Bank.

  25. originalread says:

    Citi started to change me $9.50 on an online account. I only used it as my paypal linked account. I ditched them after that.

    I’ll stick with my USAA Checking and Savings.

  26. PeteyNice says:

    I do not see the allure of credit unions (except as an FU to banks). Their websites are archaic and the interest is low.

    Schwab refunds any and all ATM fees, has wonderful American based customer service, and a pleasant web interface. Not to mention no-minimum balance and even a bit of interest for your trouble.

    Yes, you can do the rewards checking thing and get a superior interest rate but most of them are capped at $10,000 or $25,000 and you have to jump through hoops.

    Schwab has no hoops.

    Unless you deal in lots of cash I don’t see why anyone would not use Schwab.

  27. morlo says:

    The Fed 0% rate means banks don’t need or want deposit customers.

    • yellowlight says:

      @morlo: Actually they are making a huge spread with deposits now. That is a bit misleading. The reason this is occurring is checking is not profitable, they actually lose money on it. It is used as a way to get the customer in the door to sell other products. That is why they are willing to take such a lose on college students, it’s a long-term strategy. I won’t commit if it works but that is the basic idea behind it.

  28. vdragonmpc says:

    Be careful about Credit Unions. Not all are safe. I have been a member of Dupont Fibers Federal Credit Union since 1991 and they have been getting shadier and shadier.

    It has a lot to do with their moves and building of unused branches. Lately rates and fees have been bad. They offer lower rates on savings than almost ALL of the banks and are now charging fees for checking.

    They cleaned out an account we had for my wife’s college expenses. We only use it at certain times. Since it was below their new balance system they charged 10$. Even though we have other accounts with extremely large balances they cleared out the account and its now empty.

    What seems to have happened is they decided to be more like a commercial bank. They have no customer service as it seems only one person ever answers the phone and she is a Teller. No matter what issue I have its always the same employee at one of their branches that picks up and she can never help with anything. Im still disturbed that a credit union instituted fees to clear out low usage accounts.

  29. Rob says:

    @yentaleh: No it is not, in the United States it’s illegal to garnish money from the checks but after it arrives in a bank account its fair game, the bank can charge service fees of any type.

  30. dohtem says:

    @ChemicallyInert: I shook my head when I read the alternatives you listed.

    We are truly choosing the least evil now.

  31. dangerp says:

    @ChemicallyInert: Um, I just closed a wells fargo account specifically because of the fees that they charge. Ironically enough, I switched to Citibank. I guess I have to find a new bank. Look out credit unions, here I come!

  32. BrotherFlounder says:

    @ChemicallyInert: Bank of America already does this for their basic accounts, although it’s much easier to avoid the fees.

    [www1.bankofamerica.com]

  33. barb95 says:

    @dohtem: exactly. I loathe BofA with a passion of a thousand suns, and Wells Fargo is not far off. I currently have Citibank and haven’t had any problems, but this fee will tick me off. I don’t know where to go anymore.

  34. ChemicallyInert says:

    @dangerp: Well, I would have said Wachovia, but they’re basically Wells Fargo now. I’m pretty much okay with the Wachovia service I’ve been getting and I have a free checking account. Maybe I’ll have to change over after they rebrand.

  35. TurnkeyDB says:

    @dangerp: Yea and I’m close to closing mine to after I noticed WF starting charging me 12 bucks a month because 1 account dropped under $2500 and I don’t have a minimum $100 direct deposit coming in anymore because I got laid off a few months ago.

    A nice lady at the local WF branch cheerfully explained all the other accounts they would be happy to move me into to stop the bleepin fee every month so apprently now I have to play checking account roulette to stop the bleeding. Or I could head down the street to the local credit union…

  36. dpeters11 says:

    @BrotherFlounder: It sounds like that’s how they did it, the fee was waived when using direct deposit, but now it won’t be.

  37. grandzu says:

    @BrotherFlounder:
    Citibank has those types of accounts but they are going to close them to implement these fees.

  38. XTC46 says:

    @Moosenogger: Right, but does the user above overdraft? Maybe, but maybe not, and if he doesnt, they make no money.

    Also, having an average balance of 1500 seems somewhat high, my checking account average balance is at most a few hundred dollars, and it is that way becasue i keep all of my money in a savings account with a better interest rate, then only transfer in money to pay bills as needed.

  39. whysthsncnsmrst says:

    @lmarconi: @xtc46 – thinksmarter on twitter: Unless I’m wrong, the $5 is symbolic gesture of membership to the credit union. I think if you go below that $5 share, they can give you the boot from the co-op.

  40. jeffbone says:

    @lmarconi: Many credit unions participate in a branch office sharing arrangement that allows you to transact business at a “foreign” CU as if you were at one of the home offices:

    [www.cuservicecenter.com]

  41. ARP says:

    @trujunglist: You’re treadig very close a Goodwin’s Law violation. Keep it in line mister/misses /snark.

  42. jamar0303 says:

    @jamar0303: And that’s all I’m going to say on this because of what happened the last time I gave my two cents on the banking system on this site.

  43. ChemicallyInert says:

    @barb95: I know what you mean. Sometimes, I read the Consumerist and think, “Ha! Now these companies know that their shadiness leads to people going elsewhere!” Meanwhile, companies populate the list until you have to start arbitrarily forgiving/forgetting older infractions or go live off the grid and never buy anything again.

    Forget the government, corporations will run the next fascist totalitarian dictatorship. (Hell, in some countries, they already do.)

  44. ludwigk says:

    @AngryK9: Or perhaps the small ones that are dropping like flies, since something like 150+ banks went under this year?

  45. whylime says:

    @BrotherFlounder:

    Yeah. BofA began doing this a few months ago. I promptly closed my account and switched to a credit union. Shame. I had my account with them since 2003.

  46. justagigilo85 says:

    @ludwigk: I believe that number is closer to 101.

  47. Verucalise (Est.February2008) says:

    @Eyebrows McGee (now with more baby!): That’s ri-goddamn-diculous!

  48. Al Swearengen says:

    @StanTheManDean:

    They want to pay the federal loans back as soon as possible so they can start paying their executives ridiculous amounts of money again. Just think of these fees as the tip jar contributing to the retirements of super rich executives.

  49. leprechaunshawn says:

    @StanTheManDean:

    Maybe Uncle Sam should just send all the banks that got bailed out a letter stating that their bailout money now comes with a 30% interest rate.

  50. Jesse says:

    @Verucalise(countingcalories):

    I just opened a checking account with a credit union last week. This account will pay 4% interest and refund ATM fees on both ends nationwide as long as I make 12 check card purchases a month and either use online billpay or direct deposit. They also participate in the CUSC shared branching program jeffbone linked above.

    I think people avoid credit unions since membership rules were far more strict in the past, people don’t want to switch banks (it is a small hassle) and people don’t trust credit unions for some reason.

  51. NeverLetMeDown says:

    @dumblonde:

    No, I’m not. The US taxpayer now has a financial interest in the profitability of Citibank, and I want them to make as much money as possible, and charging higher fees to low-value customers seems a good way to do it.

  52. ARP says:

    @Al Swearengen: Well played sir (and very funny).

  53. t0ph says:

    @morlo: I make 95% cash deposits, so I NEED a local bank. Also, I do not have a steady direct deposit that would enable the ‘free’ checking option at many of the big banks, and I write 1 or no checks a month. Like I said, $3 a month is worth it to me. I am not gong to inconvenience myself to save such a nominal fee.

    What is this internet you speak of?

  54. RandomHookup says:

    Two other reasons why people have avoided credit unions:

    * Size of ATM network (and fees for using non-network ATMs)
    * Online banking

    It sounds like those may have been addressed by most of the CUs, but it’s hard to make a blanket case since the CUs are independent.