The news: Citigroup said it will eliminate its overdraft fees by this summer, along with charges on overdraft-protection services and returned items.
The bigger picture: The banking giant pointed out that it’s the only top five US bank by assets to ditch the fees.
Citigroup noted that its overdraft-fee revenues have been low compared to its competitors. This suggests the bank won’t take much of an income hit, if any, by ditching the fees.
Overdraft alternatives: Some consumers have used overdrafts to get available funds to pay their bills. Banking trade groups recently told the CFPB that a crackdown on the charges could jeopardize people’s abilities to meet their obligations.
However, Citigroup is making its existing overdraft alternatives more appealing to consumers by also waiving related fees:
The bank's other overdraft-avoidance features include low-balance alerts and blocking overdrafts for point-of-sale transactions and ATM withdrawals.
The big takeaway: The number of big US banks that have retail arms but haven’t yet revealed anti-overdraft moves continues to shrink. Those remaining face competitive pressure to follow suit.
Based on the Federal Reserve’s 20 largest banks with retail operations, the dwindling group includes: