Citibank announced plans to eliminate overdraft fees this summer, becoming the largest bank to make the policy change.
The bank will stop charging its overdraft fee, returned item fee, and overdraft protection fee, depending on a press release from February 24. Citi said it was the only top 5 bank in the United States to completely eliminate the fee, a move it says will help increase financial inclusion in underserved communities.
“This latest enhancement is a significant milestone for Citi as a leader in the banking industry offering the most consumer-friendly overdraft practices,” said Gonzalo Luchetti, Citi’s CEO for US Personal Banking. “We are constantly looking for ways to use our advanced capabilities to make the financial system simpler and fairer for communities that have little or no financial flexibility.”
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CAPITAL ONE ELIMINATES OVERDISCOVERY FEES, THE CFPB INVESTIGATES UNIVERSALLY TO END THESE “ABUSIVE” FEES
Eliminating fees will help underserved communities, says expert
Citi offers two overdraft protection services that cover negative balance transactions. None of these will have a fee starting this summer:
- Security controle – automatically transfers funds from a linked Citi savings account to cover a negative balance
- Verification More – a line of credit that automatically transfers funds to cover a negative balance
Beyond that, Citi will continue to not allow ATM or point-of-sale transactions when there are no funds available. And the bank will allow consumers to sign up for low balance alerts.
An expert applauded Citibank’s announcement, saying eliminating the fee will help underserved communities.
“Overdraft fees give people a boost when they’re down,” said Nadine Chabrier, policy and litigation attorney for the Center for Responsible Lending (CRL). “Their costs are borne by financially vulnerable consumers. These fees disproportionately hurt Black and Latino people with bank accounts. Overdraft fees are also one of the most common reasons people lose their accounts. banking.
“Citi’s decision to eliminate overdraft fees is a win for the financial fairness of its many customers,” she continued. “Families who do business with Citi will be more financially secure because of this action.”
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EXPERTS SAY CFPB CUTS TO DISCOVERY FEES COULD HARM CONSUMERS
The CFPB increasingly criticizes overdraft fees
Citibank’s announcement comes as the Consumer Financial Protection Bureau (CFPB) has become increasingly critical of what it called “abusive overdraft fees” in a recentpublished report.
“Abusive overdraft practices remain a systemic problem,” Chabrier said. “The Consumer Financial Protection Bureau, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the National Credit Union Administration and the Federal Reserve Board have the power and the obligation to protect consumers, as well as to preserve safety and soundness, by controlling In the absence of meaningful regulatory action, financially vulnerable families will continue to be dragged into the quicksand of relentless overdraft fees.
Corn some experts disagree with this position, arguing that the CFPB’s universal overdraft fee reduction could actually hurt consumers, as it would also limit overdraft protection options.
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