Citi to Eliminate Overdraft Fees

Citi will eliminate fees on overdrafts, overdraft protection and returned items by this summer, the banking giant announced Thursday (Feb. 24).

While many banks have taken steps to eliminate fees in recent months, Citi argues it will be the only “top five U.S.” bank — in terms of assets — to completely eliminate such fees.

“This latest enhancement is a significant step for Citi as a leader in the banking industry offering the most consumer-friendly overdraft practices,” Gonzalo Luchetti, CEO of US Personal Banking at Citi, said in a news release.

Luchetti added the move is part of the bank’s campaign to “make the financial system easier and more equitable for communities who have little or no financial buffer.”

Citi said that even before this measure, the revenue it collected from overdrafts was among the lowest compared to its competitors.

Read more: Truist Unveils No-Overdraft Accounts

As PYMNTS reported earlier this year, several American have begun to eliminate or modify overdraft fees, which earned them an estimated $15.4 billion in 2019, in an effort to compete with zero-fee FinTechs while also appeasing customers and politicians.

Capital One has dropped overdraft fees, despite earning about 0.5% of its income from them in 2020, while JP Morgan Chase, the nation’s biggest bank, recently announced modifications to its overdraft policy.

In January, Bank of America announced it would do away with non-sufficient fund (NSF) fees and lower overdraft fees from $35 to $10 beginning in May.

See also: TD Bank Revamps Overdraft Fees, Gives 24-Hour Grace Period

In some cases, fee changes come from pressure from the government. Last month, TD Bank said it was revamping its overdraft fees following an agreement to pay $122 million to settle with the Consumer Financial Protection Bureau (CFPB) over overdraft fee issues.

Under these changes, customers will be able to now overdraw their accounts by up to $50 before receiving an overdraft fee, while customers who overdraft more than $50 will have 24 hours to bring their account in line before being charged a fee.

The bank also unveiled plans to cut out the transfer fee for customers using savings overdraft protection services.