Citigroup will eliminate overdraft fees this year, becoming the biggest lender in the nation to get rid of the charges, which have been criticized by regulators.
The bank will do away with fees for overdrafts and returned items by the summer, it said in a statement. It follows smaller lenders, including Capital One and Ally Financial, that said last year that they would halt the fees. Among the nation’s banking giants, Bank of America said it would cut — but not eliminate — overdraft charges to $10 from $35 this year, while JPMorgan and Wells Fargo have tweaked their services for strapped customers.
Citigroup’s move aims “to make the financial system easier and more equitable for communities who have little or no financial buffer,” said Gonzalo Luchetti, the chief executive of U.S. personal banking at Citi.
Banking regulators have focused on overdraft practices in recent months. The acting comptroller of the currency, Michael J. Hsu, has said the charges disproportionately affect the most financially vulnerable customers. Rohit Chopra, the director of the Consumer Financial Protection Bureau, has said that many lenders have become “hooked on overdraft fees” to feed their profits.
The U.S. banking industry’s revenue from overdraft and insufficient funds was $15.47 billion in 2019, according to an estimate in December from the consumer bureau.