Citi's fee scheme is even worse than BofA's
Now that Bank of America has thrown down the $5 monthly debit fee gauntlet as a New Year's surprise for its customers, rival Citigroup followed suit this month with an outrageous $15 monthly fee for checking account holders who don't leave at least $6,000 in the bank.
Hey, at least they kept their promise not to impose a debit card fee!
In light of its new checking fee, Citigroup's recent chest-beating that it would not "charge fees that discourage (debit) use or make it unreasonably expensive to take advantage of the tools and services that consumers say are important for managing their finances" sounds more like satire than strategy.
Even when BofA's roundly booed debit card fee kicks in Jan. 1, holders of its basic checking account would still pay nearly $2 less than Citigroup customers.
All of this parsimonious positioning comes on the heels of the new Oct. 1 Fed mandate that lowered the "swipe fee" amount that banks can charge merchants per debit card transaction from 44 cents to 24 cents, cutting in half one of banking's sacred cash cows.
Don't misunderstand: 24 cents is still outrageous for an electronic transaction that costs the bank all of 4 cents. Consumer groups fought hard last summer for a 12-cent cap but were beaten at the buzzer by a multimillion-dollar, full-court press by the banking lobby.
But unfortunately, the Citi news gets worse.
Starting Nov. 1, holders of a Citi Account will have to more than double their minimum balance, from $6,000 to $15,000, to avoid paying a monthly $20 fee. But hey, at least you can include your mortgage!
Perhaps the scariest news of all came from Stephen Troutner, who heads Citigroup's banking products for U.S. consumer banking. Troutner maintains that Citigroup's checking accounts will still "be extremely competitive" compared to the rest of the industry.
The way consumer banking is headed, I'm afraid he might be right on the money.