As featured in The Wall Street Journal, Money Magazine, and more!

Charge $20 a Month for Checking Account?

For the last few years, savers have been punished by banks offering low interest rates. If that weren’t enough, banks now want depositors to pay for the privilege of putting money in a bank. In the world until recently, banks sought depositors because they used the public’s money to increase lending to borrowers who were willing to pay for the privilege of using someone else’s money. The tables have been turned. Rather than borrowers paying for the bank’s services, depositors are paying through an increasing barrage of fees.

Banking Deal: Earn 1.30% APY on an FDIC-insured savings account at Synchrony Bank.

A number of banks have been testing debit card fees. This is the new state of the banking industry. It’s easy to blame increased fees on new regulations that limit the industry’s ability to generate revenue from merchants, as banks turn to customers to become the next cash cows. Other reasons for the industry’s desire to find new fees include Basel III compliance which requires banks to increase their financial strength and new SEC regulations for money market funds which require banks to make safer (and less lucrative) investments with their own money. Banks are eager to jump at the chance to punish customers and blame the government. No one is forcing banks to turn to customers to keep profiting, but without banks profiting from offering loans either, it’s the only untapped source.

As public companies that answer to shareholders, banks are obligated to find as many methods as possible to profit — even to earn outsized profits while taking advantages of customers who feel they have no option other than sitting back and taking it and customers who aren’t paying enough attention to know they’ll be paying more fees.

The more I see the banking industry’s path, the stronger I believe in the importance of credit unions. Find a credit union and move your money before banks find more ways to part customers from their money. If you can’t find a convenient credit union for which you qualify, take a look at PerkStreet’s checking account with a 5% cash back debit card.

Updated December 21, 2015 and originally published October 5, 2011.

About the author

Luke Landes is the founder of shizennougyou. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about Luke Landes and follow him on Twitter. View all articles by .

{ 36 comments… read them below or add one }

avatar 1 Ceecee

Dealing with cash is looking better every day. If you don’t write a lot of checks, it would be cheaper to get money orders when needed. I just flat out refuse to pay the bank so that they can use my money to lend. The small local banks are going to love this!

Reply to this comment

avatar 2 Anonymous

“The Citi checking account (called the “Citibank Account”) comes with a $20 fee for customers who don’t maintain a $6,000 balance. The new minimum balance to avoid the $20 fee is $15,000 combined balance between savings and checking.”

So you pay $20 if your balance is below $6k or $15k? Or some hybrid?

Reply to this comment

avatar 3 Luke Landes

The new minimum balance required to avoid the $20 fee is $15,000.

Reply to this comment

avatar 4 Bryan J Busch

The only scenario in which this makes sense is if Citigroup had been consistently losing so much money every quarter that they’d be in danger of failing.

Reply to this comment

avatar 5 Anonymous

No it doesn’t. It makes sense any time that adding this fee would, in the bank’s estimation, increase their profit. The bank’s goal is not just to survive, but to make the most profit. Banks are not public utilities that exist for people to have a place to put their money.

Reply to this comment

avatar 6 lynn

Yes, Paul, they are. Simply put: The money is ours, we gain a small fee from the bank that then makes a larger fee for lending our money. There are other places to put our money.

Reply to this comment

avatar 7 Anonymous

That’s astounding. Do you have a link to this announcement?

Reply to this comment

avatar 8 Luke Landes

Citibank hasn’t put out a press release to announce the new fees. Rather, account changes, particularly negative changes like these, are sent directly to customers. Not being a customer, I don’t have anything to share. All of the information about the changes is publicly available.

Reply to this comment

avatar 9 Anonymous

This is one unintended consequence of the gov’t moving in and placing artificial limits on charges. The good thing is that these charges are transparent which allows consumers to measure and compare and move to the institution that best provides a combination of services and fees that meets their individual needs.

Reply to this comment

avatar 10 tbork84

I absolutely agree. My only problem is that now Congress is launching a crusade against the banks for following the demands of new legislation for new fees on banking services. Whether or not you think that this administration’s financial reform was good or bad for the consumer, it looks like the banks are in line with new regulations. If people don’t want to deal with the charges, there are alternatives to having their money with a big bank.

Reply to this comment

avatar 11 Anonymous

These “new ” fees aren’t new at all. To my recollection, fee -free checking became a competitive pressure ~ 1980-ish; prior to that, most banks charged a fee for checking accounts. A few got the bright idea that they could steal customers by offering free checking accounts, and by subsidizing low minimum balance accounts from other revenue sources, or making up in economies of scale, winning additional business from those free account customers.. Soon, most banks had to match those offers to stay in the game. So, while the tide seems to be turning, what goes up must come down, and eventually, history will repeat here. I think the real problem is that the big banks have an advantage, and even if you move your business to another bank, that bank may end up being bought by one of the majors and you are back to square one.

Reply to this comment

avatar 12 Anonymous

Now, it makes financial sense to keep cash under your mattress!

Reply to this comment

avatar 13 Anonymous

I was actually going to post something similar to what crashdamage1957 has already said. I will just add that it seems to be only the younger generations, of which I am part of, who feels entitled to the free services from banks as that is all they have ever known. I can see it in most of the personal finance blogs I read. I bet you parents remember when checking and other services were not free.

Reply to this comment

avatar 14 Anonymous

“The younger generations” wouldn’t have felt this way if the baby boomers didn’t use free checking as a marketing tool before looking to take it away to maximize profits on the backs of those who can afford it least. Why not raise fees a percent or two on the people that have millions in the bank?

Besides, the younger generations should be entitled to something given what has been kept from them such as… affordable housing, affordable schooling, affordable healthcare, jobs, and an environment that hasn’t already been ruined.

Reply to this comment

avatar 15 Anonymous

These are business, marketing decisions and entitlement has nothing to do with it. That is part of our problem today – too many of us think that we are entitled! Do you really think that raising fees on the backs of the bank’s biggest customers is the way to go? Those large balances are what are used by banks to lend money.


Reply to this comment

avatar 16 Anonymous

That’s flawed logic. $5 from a million people can be loaned out the same as $10,000 from 500 people.

Reply to this comment

avatar 17 Anonymous

This is kind of a moot point.

People who have millions do not keep it in checking or savings accounts.

So no, that rich people money is not there to charge fees on. Nor is it there to use to lend out.

Reply to this comment

avatar 18 Anonymous

Well, the money doesn’t have to be checking or savings account fees. There are many other fees that full service banks charge their wealthier customers such as financial planning charges. These can be used in place of the fees for basic checking accounts.

In the end, Citibank has done millions of dollars of damage to lost business and their reputation so we’ll see how it pans out for them.

Reply to this comment

avatar 19 Anonymous

They are a business. It makes little sense for any for profit business to charge their best customers the highest fees. Generally the biggest customers get the best rates. There is certainly no moral imperative for a bank to offer cheap services to small customers.

avatar 20 lynn

Bentley, please refer to my first post. The money is ours. What I remember is the banks treated us with respect because they remembered the money was ours.

Reply to this comment

avatar 21 Anonymous

Credit Unions, Credit Unions, Credit Unions. Or small, local banks…

I’m a big believer in both. My primary checking account back home was from a smallish regional bank (at most 5 locations), they never charged any fees, there weren’t many ATMs but this was in the late 90s, before I started using debit cards. I still have this account, but only keep $200 in it to keep it open, my parents will occasionally deposit money in it for birthday/xmas gifts, making it easy to get cash to me from across the country.

I also have a savings account at a credit union back home. This was an account for employees and family of my mom’s former employer. They had one location, open from 12-4 everyday, no ATMs, no online banking, statements twice a year, but the interest rates were always high. The statements go to my parent’s house, so I haven’t seen one in about a year, but the last one my mom forwarded me from 2010 indicated an interest rate of %3.

My current primary checking account is a Credit Union affiliated with my employer (a university). The savings account interest rate is crap, but they don’t charge fees, and they reimburse up to $5 a month in other bank’s ATM fees. So if I travel I get cash before I leave, and then might only need to get cash once elsewhere.

Reply to this comment

avatar 22 Anonymous

That bank that you are maintaining a relationship with by keeping a balance of $200 is probably loosing money on your account.

Reply to this comment

avatar 23 Anonymous

Oddly I quit my credit union several years ago because they wanted to charge a monthly fee on my simple savings account while all the banks had zero fee accounts at the time. Now that CU has no fees and the banks are starting to charge them.

Reply to this comment

avatar 24 Anonymous

$20 fee is very high. This must be a calculated move by Citi. They probably want to get rid of their small customers who don’t make them any money and then only care about retaining customers with larger balances who wouldn’t actually pay the fee.

Reply to this comment

avatar 25 lynn

You may be on to something here, Jim. I had a small cc with Citi. I had so I could feel secure ordering online. If something happened, I could easily pay off the maximum balance. They sent me a letter saying if I didn’t use it more oftenm they were going to charge me some sort of fee. I called and canceled the card. Now I use paypal. It’s funny, now they are trying to get me back offering me money to open an account. Sorry folks, nothing is free in the banking world. They get additional clients, then add a ton of fees. I don’t know about you all, but I’m tired of all of this ‘ creative’ financing.

Reply to this comment

avatar 26 Anonymous

Gredit unions are a good choice. Direct deposit seems to avoid at least the checking account fee.

Reply to this comment

avatar 27 wylerassociate

i’m so glad that I’m not a member of citibank, that is outrageous but not surprising.

Reply to this comment

avatar 28 shellye

Heh, heh, all these fees make my job so much easier to do. I work at a credit union. If you are out there and want to join a credit union, and are unsure if you qualify, Google your state’s Credit Union League (ex. Georgia Credit Union League, etc) and they will help you find a credit union to join.

Some of them may not have as many locations as you’d like, but ask about shared branching. This is where a network of credit unions band together and let each other’s members use their branch locations for deposits, withdrawals and loan payments. Additionally, most CUs have online banking and bill pay, so there is no need to even go into a branch most times.

Credit unions typically charge members lower interest rates on their loans than banks while paying out higher dividends on its savings products. This is because credit unions are non-profit organizations and return all the money they make from interest income and nominal fee income to their members in the form of higher dividend rates and lower loan interest rates. There are no shareholders involved.

Switching from a bank to a credit union makes a very powerful statement.

Reply to this comment

avatar 29 eric

I actually have a Citibank checking account from long ago. Once they wanted to start charging a fee, I requested to close it and they waived the fee for me so I would stay. If not, I would have changed my primary checking a long time ago.

Reply to this comment

avatar 30 qixx

Just keep your eyes on your account. They might stop waiving the fee at any moment. I had Wells Fargo do this to me. I am currently looking for the best local bank/credit union to move to. I’m done with these banks.

Reply to this comment

avatar 31 Anonymous

I abandoned banks for a credit union years ago, after one too many gouge. CU customer service is much better, and they don’t charge you for the privilege of letting them use your money. Who in her right mind would keep 6 grand in a checking account???

I do keep a fair amount of cash for long-term living expenses at the credit union, but not in checking.

Reply to this comment

avatar 32 Anonymous

During my 62 years of life, when I became an adult, I had accounts with a few major banks. And I did not care for most of them. It is amazing how bad customer service is at many of them. I remember one time for some reason I had to go in to a Bank of America branch back in the 70’s and I waited in line for ever it seemed. When I got to the teller window they had an attitude. I decided that day that I would never have an account with B of A. Any of you that have an account with Wells Fargo I hope you are receiving better service than I did. Some of their employees that work in California provide horrible service. Another rather large bank that I had an account with in the 60’s gave me a hard time and an argument when I tried to close my account with them. Try a credit union; much better service.

Reply to this comment

avatar 33 Anonymous

When I read this I thought it was outrageous! Thankfully I bank at a bank that doesn’t charge a fee for going below a certain amount. This article interested me so that I put a link to it on my own financial-related blog.

What I would love to know is how well this is sitting with the Citibank customer? Are they going to start to leave Citibank?

I loved reading the comments as well and I’m so thankful and grateful for the bank that I have!

Reply to this comment

avatar 34 Anonymous

I am a citibank customer and I have yet to recieve any monthly charges on my account other than for non-citi atm use fees, and with the checking acount agreement I would have atleast $1500 over a 30 day period by direct deposit and pay at least one bill through the online bill pay. Which I did not make a payment from the online account I was charged $10 monthly account fee, but have not recieved any other account fees or debit card use fee. I would like to add to that by saying as a citibank customer I would not recommend them to my jack russell terrior.. They do certain things back ass ward. poor customer service – Especially in the banking offices. I have been contemplating a bank change since last November but Fear I will just end up with another rude disorganized institution that does have higher fees. Any Really Good place of Banking suggestions?

Reply to this comment

avatar 35 qixx

My top suggestion would be to find a credit union near you. Then if you want another bank for something specific or for another reason you can get an account. But start with a local credit union. i’ve had nothing but good experiences with 3 different credit unions i delt with in the past.

Reply to this comment

avatar 36 Anonymous

I would like to see the dates on when these comments were made? My comment here is dated August 3rd, 2016

I am a Citibank customer in California but there isn’t a Citibank near me without over 160 miles because Citibank has closed more than 400 banks that I have no where to go to a branch at all as I use a Citibank ATM machine to make my deposits in. Yet I got a letter than Citibank is raising rates this October 2016 but I have a business account with is free checking if I make 5 bill pay payments on my Citibank business account. I have not been to a Citibank in over a 1 year and a half, that was in Santa Barbara (100 miles from my town) and they even closed the Santa Barbara one down last year.

I have another checking account with BFA and they give me free checking but I have to use a ATM machine only, I’m only with that and Citibank also but after they closed so many banks down, I have no access to branch so why would I want to pay for $15.00 a month and there’s no branch anywhere?

Should I continue to do business with them? I use my Citibank debit credit everywhere and when I deposit money in an ATM machine, I get 95% of that money onto my account without any holdings, that’s a good thing I like about Citibank but the bad thing is I have no branch anywhere.

I miss old banking personally as the internet has killed the banking industry or to no branches but Citibank is still going on strong either way.

I am frustrated though, I would like to here some input also.

Reply to this comment

Leave a Comment

Note: Use your name or a unique handle, not the name of a website or business. No deep links or business URLs are allowed. Spam, including promotional linking to a company website, will be deleted. By submitting your comment you are agreeing to these