Citibank (NYSE: C), Bank of America (NYSE: BAC) and scores of other banks have begun charging new and higher monthly fees for holding checking accounts.
Citibank customers with Access or EZ checking accounts will now be charged a $7.50 monthly fee unless they maintain a minimum balance of $1,500. Previously, the monthly fee could be waived if customers setup direct deposit for paychecks or had two bills automatically paid from the account. Starting in February, those two measures will no longer qualify customers for the fee waiver.
Natalie Riper, a spokeswoman for Citibank, said that the change will “impact a relatively small percentage of our customers” since most customers maintain the $1,500 balance. Riper declined to comment about how many people would be affected by the change.
These changes from Citi and Bank of America come as Congress considers passing new legislation that would limit banks’ ability to charge customers overdraft fees on checking accounts. In the last few years, it has been standard practice in the industry to automatically enroll customers in overdraft programs.
Some consumer advocates have commented that these programs are misleading because consumers assume that they can’t spend more than they have using their debit cards. Fees for over drafting on a checking account can be high as $35.00 per violation.
The recent Congressional scrutiny over the fees that banks charge has lead to a conclusion that most industry analysts have made that free checking accounts will likely cease to exist. Bob Meara, a senior analyst at Celent, a Boston-based financial research firm, recently stated that “free checking as most of us know it can no longer exist.”
