Citibank to extend free checking
Citi had planned to impose fees on holders of two types of 'free checking' accounts.
Citibank has reached an agreement with New York Attorney General Andrew Cuomo to alter its plan to charge more than 1 million consumers nationwide fees on what were supposed to be "free checking" accounts.
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Under the agreement, Citibank will extend the benefits of those free checking accounts throughout 2010 for consumers who signed up for them in 2009. Citibank also will not charge fees on checks until Jan. 31, 2011. The company had originally planned to begin charging the fees on Feb. 1.
For several years, Citibank has advertised and offered "free checking" services to consumers who opened an EZ Checking or Access checking account, as long as the consumer used either direct deposit or made two monthly online bill payments.
Depending on where the consumer banks, the free checking offer meant that Citibank would not charge monthly maintenance fees of $7.50 or $9.50, or per-check charges of 50 cents or $1 after the first 10 checks.
Citibank's "free checking" ads, which appeared on its Web site and in branches, never disclosed that the service could be terminated at Citibank's discretion. On Nov. 2, Citibank decided that effective Feb. 1, EZ Checking and Access account holders would be charged a monthly fee and per-check charges if their combined balances fell below $1,500.
The company then failed to adequately notify affected consumers about the change, critics say. The vast majority of account holders who would have been subjected to these fees would have been charged at least $9.50 per month.
In order to be eligible under the agreement, consumers must have met the offer's original qualifying conditions in the past year and continue to do so. All affected consumers will receive notice by mail of the changes.
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