Tuesday, October 4, 2011

Is this the end of free checking?

Bank of America has recently announced that a 5 dollar monthly fee will be charged for their debit card holders when they make purchase(s). In the wakes of new federal regulations that are now pushing the financial institutions to find ways to compensate for loss, Chase, US Bank and Wells Fargo have also announced their plans or are testing to impose a monthly fee on their debit cards.

Ron Lieber and Ann Carrns of The New York Times wrote in their Your Money column on September 30, 2011 that "Citibank did not plan to add monthly debit card fees."

But the good news will probably come to an end. I received a notice from Citibank in mail today. Basically, it now offers me two "clear options":

For statement periods starting on or after November 10, 2011:

1. Keep $15,000 in prior calendar month combined average balances - starting with your November 2011 balances - and pay no monthly service fee or non-Citibank ATM fees...


2. Pay a flat $20 monthly service fee, which is not changing, if qualifying balances are not met (non-Citibank ATM fees will also apply).

According to this letter, no matter what I choose to do, I won't pay additional fees for using my debit card for purchases or for paying bills online, which, they say, are "new types of fees that many other banks are testing or have already introduced" and they believe that by introducing an allegedly old type of "flat" fee, it will "simplify" my financial life.

Holy crap! Simplified? Really? Well, I don't see how this is going to simplify my financial life. Since I don't have that much money and would want to have that much money sitting in a low interest bank like Citibank, even if I have the crapload of money they ask for, I would probably, like many others, be forced to charge a "flat rate".

And worse still, for Citi customers who enrolled since June 10, 2011, Citibank is going to terminate ThankYou Rewards for their debit purchases starting December 9, 2011.

I have two checking accounts with Citibank. One was enrolled to ThankYou Rewards prior to June 10, 2011. The other was enrolled recently. So I believe I won't receive any points from the newer account I opened in August. In fact, opening the account was forced by a personal banker who, I assume, just want to earn a little commission.

My experience with Citibank is always hit and miss. It's now time to switch to Charles Schwab and Provident Credit Union. Paying such a steep monthly "flat rate" is the most stupid thing a person can do.


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