Citibank made sure to draw attention last week to its lack of fees for using debit cards after news broke that its biggest competitor would start charging them.
But at the same time, the bank was letting its customers know they’ll soon have to meet stricter requirements to avoid monthly checking account charges.
The main changes will be seen by customers with mid-tier checking accounts, which offer the potential for earning interest and a few other perks. Starting in December, Citi will charge $20 a month on these accounts, unless the customer has combined balances of $15,000 or more in checking, savings and investment accounts or loan balances.
The fee was previously waived for combined balances of $6,000 for that level of account, which offers perks such as interest-bearing checking.
Customers also pay $2 fees for using non-Citi ATMs if they don’t meet the balance requirement.
For Citi customers who used a product called “EZ Checking,” which is being phased out, the change is more dramatic. For the past year EZ accountholders were able to avoid fees if they had combined balances of $1,500. If they didn’t have that much, the fee was $7.50 or $9.50 a month, depending on their state. Before that, those customers were able to avoid fees with a combination of direct deposit and online bill paying.
Customers who can’t meet the requirements may find it necessary to switch to Citi’s basic checking account. The bank last month raised the monthly fee on that account to $10 from $8, unless customers maintain $1,500 in combined balances, or use both direct deposit and online bill payment at least once per month.
Customers have two months to decide how to respond to the changes. The fees will start being charged in December and will appear on January statements.
In some cases, avoiding fees may be as simple as linking accounts together.
That’s because the combined balance requirement includes not just deposit accounts, such as savings, certificates of deposit and IRAs, but also credit cards and loans — where the amount owed is counted as the balance. “If you just have your mortgage with Citibank you’re pretty much there,” said Steve Troutner, Citi’s head of U.S. consumer banking products.
That reflects a broader effort in the banking industry to try to get more customers to open multiple accounts at one bank.
Citi’s move comes a few days after Bank of America Corp. said it will be charging $5 per month for using debit cards starting next year. Other banks have also been testing such fees. Citi is highlighting the fact that it’s not charging monthly debit fees or fees for using online bill pay.
However, it did cut back on its debit rewards program. Last month Citi said it will no longer give rewards points for debit card transactions. That stemmed, in part, from changes in federal regulations that cut roughly in half the amount banks could charge retailers for processing purchases made on debit cards, a rule that’s cutting sharply into bank revenue.
Citi’s latest changes to its program include tweaks for how many points customers are awarded for direct deposits and other banking activity.