New York Attorney General Andrew M. Cuomo today announced a nationwide agreement regarding banking fees. He held a telephone press conference, which I listened in on, and if you're a Citibank customer, this news may affect you.
Starting today, Citibank was basically going to kill its free checking program. But after the New York Attorney General's office stepped in, Cuomo was able to announce today that -- for many customers -- the free checking program has been extended until at least the end of the year.
The customers who get a break are anyone who signed up for Citibank's free checking between Jan. 1, 2009 and Nov. 5, 2009. If you signed up for it before 2009, it sounds like you're out of luck.
Last November, Citibank announced that it was going to change the terms of its "free checking account," also known as the "EZ" account. Starting today, if you have a balance under $1,500, you were going to have to pay $7.50 to $9.50 (depending on your state) a month to have your "free" checking account.
"That comes to about $120 dollars a year," said Cuomo, going with the $9.50 scenario, "and it affected over 1 million people nationwide, so it adds up quickly."
Yeah, $120 million a year, if my calculator is working correctly.
Cuomo made it clear that Citibank had and has the right to change the terms of its EZ account, but must give "reasonable notice" to change them. And the Attorney General's office didn't feel that the bank did a very good job of reporting the intended change to its customers.
Cuomo said that the Attorney General's office's "bread and butter" is to protect consumers, "and we're protecting them with quite tangible results."
He added that this agreement with Citibank should "service as a notice for the entire banking industry, that we have been watching for some time and will continue to scrutinize the fees" that banks try to foist on their customers. In this case, said Cumo, "Citibank said that they were promising 'free checking.' Those are the words. 'Free checking' means 'free checking.' Sometimes the words mean what they mean."
He also took issue with the fact that the banks are charging these fees for people who have less than $1,500 in their account since, "in many ways, those are the people who can least afford to pay the fees."
Geoff Williams is a regular contributor to WalletPop, often writing about banking issues. He is also the co-author of the new book "Living Well with Bad Credit."
Citibank kills free checking but attorney general warns, not so fast