Citigroup is the last of the country’s five largest banks to pull back on fees charged to people who overdraw their accounts, but it’s going the farthest: Starting this summer, it will completely eliminate overdraft and bounced check fees.
Citi said Thursday it would stop charging altogether for both main types of overdrawing: an overdraft fee when they cover a transaction on an account that doesn’t have enough money to cover it, and a non-sufficient funds (NSF) fee—also called a returned item fee—when they block it. The bank has been charging $34 for each of these.
Citi joins a wave of banks that have relaxed, reduced, or eliminated overdraft fees in recent months. Government regulators warned late last year that they were scrutinizing financial institutions that heavily relied on the fees, and have even suggested that the practice is contributing to income inequality since, by definition, it hurts people who live paycheck-to-paycheck the most.
JPMorgan Chase, Bank of America, Wells Fargo, and U.S. Bank, the four other biggest U.S. banks by assets, have either only eliminated NSF fees, added grace periods, reduced the amount of the fees, or otherwise loosened their policies, though Capital One and Ally Bank also completely eliminated overdraft fees.
Before Citi’s announcement, one researcher estimated recent changes at 13 banks he identified would save consumers more than $3.5 billion annually.
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