Citibank, one of the United States’ largest retail banks, announced it will discontinue charging overdraft fees, returned item fees, and overdraft protection fees effective a yet unspecified date 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,” Citi CEO of U.S. Personal Banking Gonzalo Luchetti said. “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.”
Citi has two different overdraft protection programs that cover negative balance transactions. Both of which will be available without a fee once this policy takes effect.
“Overdraft fees kick people when they are down,” Center for Responsible Lending’s Policy and Litigation Counsel Nadine Chabrier said. “Their costs are borne by financially vulnerable consumers. These fees disproportionately harm Black and Latino Americans with a bank account. Overdraft fees are also one of the most common reasons people lose their bank accounts.”
Citibank’s announcement comes as the Consumer Financial Protection Bureau (CFPB) has begun monitoring banks charging of overdraft fees. The CFPB monitoring includes the collection of public comment through the end of March 2022.
Experts from banking trade associations have expressed concern about the potential rulemaking by CFPB to limit or prohibit the charging of overdraft fees. These experts have suggested that cutting overdraft fees could harm consumers through the limitation on or termination of overdraft protection services as a result of such a rule.