Citigroup just became the biggest US bank so far to get rid of overdraft fees, which consumer advocates say disproportionately hurt low-income customers
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- Citigroup is eliminating overdraft fees, becoming the biggest US bank to do so thus far.
- Overdraft fees disproportionately affect vulnerable and low-income people, consumer advocates say.
- Citi joins a number of other banks making changes to their overdraft and non-sufficient fund fees.
Citigroup is eliminating overdraft fees, becoming the biggest US bank so far to completely get rid of the controversial charges.
The firm, which is the fourth-largest US bank by assets, announced Thursday that it plans to toss overdraft fees, returned item fees, and overdraft protection fees by this summer.
"This latest enhancement is a significant step for Citi as a leader in the banking industry offering the most consumer-friendly overdraft practices," said Gonzalo Luchetti, CEO of US Personal Banking at Citi, in a press release. "We are continuously looking for ways to utilize our industry-leading capabilities to make the financial system easier and more equitable for communities who have little or no financial buffer."
Consumer advocates have long said overdraft fees disproportionately affect vulnerable or low-income people, piling extra charges onto those who are least able to afford them.
Banks rake in billions of years in combined revenue each year from overdraft and non-sufficient fund fees. In the first nine months of 2021, Citibank reported revenues of $70 million from these charges, according to the Consumer Financial Protection Bureau. In the same period, Wells Fargo posted $1 billion in revenue from these fees, JPMorgan Chase posted $924 million, and Bank of America reported $823 million, the agency says.
Besides Citi, many other banks have eliminated or reduced some overdraft fees lately or added grace periods. Last month, Bank of America said it will lower its overdraft fees from $35 to $10, starting in May. In December, Capital One announced it's eliminating overdraft fees for consumer banking customers.