Does Citibank’s New Monthly Fee On Low Balances Spell the End of Free Checking?

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By , Staff Writer
Posted on Mon Nov 9, 2009, Last Updated on Wed May 21, 2014

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If you have an “EZ” or “Access” checking account with Citibank and your balance is starting to drop below the $2,000 mark, you might want to think about moving your money or getting a second job. Citibank has recently announced that it is reinstating the $7.50 monthly fee for any EZ or Access checking accounts that drop below $1,500.

Does Citibanks New Monthly Fee On Low Balances Spell the End of Free Checking?

A Reward System for High Balances

Citibank has stated that this change was implemented as a way to simplify the accounts and “recognize and reward” customers who maintain the necessary balance. This policy seems to effectively separate out lower income customers, and will likely cause many of them to go to other banks, as a $7.50 fee, adding up to a possible $90 a year, can be quite a financial burden, especially for those customers with accounts that have reached the $1,500 mark.

Say Goodbye to “Free” Checking

While this kind of “penalty for the poor” fee is currently not a common practice at most banks, if Citibank doesn’t lose customers as a result of this policy we may see other banks following suit. Bank fees that add up to $90 a year may seem small, but if you consider the thousands of customers at a bank like Citi that may be charged, it can become a significant source of revenue for a bank.

With new legislation that aims to limit bank charges like overdraft fees, banks have warned that it will the the customer who suffers as banks try to raise that lost revenue elsewhere. It seems that the trend has been to slowly add fees to accounts that once were billed as “free checking,” as banks lose the ability to offer this sort of product to their customer.

For information on the Citibank EZ and Access fee changes, visit their website here.  Note: The Access Account is not longer available.

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  • lauriemclachlan

    Branch banks simply can't afford to service customers with low balances and low account activity. US Banks spend approximately $80 billion each year just to build and maintain their branches. Most people don't realize how expensive they are. Online banks don't have this challenge which is why they can afford to offer so much more to customers.

    I work for PerkStreet Financial and we offer a free online checking account with no minimum balance requirement and no annual fee. We offer 1% cash back on debit card spending and access to the largest surcharge-free ATM network in the country.

    http://www.perkstreet.com

  • rufkingkiddinme

    I can see now how hard it is for the poor banks and their executives…laurie go F*ck yourself!

  • PissedofinNYC

    I live in New York City and there is a bank on virtually EVERY CORNER. This is not an exaggeration. Maybe that's why the poor widdle banks have to spend the $80 billion yearly that Laurie mentions above. Do you know the price of commercial real estate in Manhattan???? As far as I'm concerned, the banks who practice this hubristic decadence can go to hell.

  • akiko10

    I didn't get my letter of citibanks new service fees until Feb of 2010 that's when I started looking at other banks, I called citi and they said that's the way it was. I went into citi to close the account I had with them, they wanted to know why I was leaving, I told them the service fees were ridiculous. I was then informed that they had another account that only charges 3.50 instead of 9.50 and no .50 check fee unless you go over 8 checks, I was furious, I had spent most of the week trying to find another bank, they didn't even change my account, I kept my debit card, and she even took off the service charge and put it back in my checking account for the month before. Obviously this isn't public knowledge unless you go into close the account, so for those of you who as they put it “can't keep 1,500.00 in their account”, there is an alternative, but, you have to go in and say you want to close your account and then they will tell you about it. I guess they are just hoping people will just pay them the service fee.

  • I smellClassAction

    Phone service will offer you one with lower fees and zero qualitative difference other than less penalties. Literally, I asked the rep point blank, “Why would anyone NOT want this other checking account? What's the downside?”

    She said, “There is none.” So they just count on customers not checking their statements. Going into a branch I was able to get all fees waived “indefinitely.” But as this is the second time in 6 years they've pulled the switcheroo, I'm closing my citibank accounts for a free account elsewhere.

  • Penny pincher

    I noticed the 9.50 charge and made the move to dump these greedy bankers – its always good to review your statements for bank surprises. Smaller banks will gain a bigger share of customers with continued free checking. [So. Cal]

  • Penny pincher

    I noticed the 9.50 charge and made the move to dump these greedy bankers – its always good to review your statements for bank surprises. Smaller banks will gain a bigger share of customers with continued free checking. [So. Cal]