Citi Follows Bank Of America In Instituting Debit Card Fee, $1.9 Trillion In Deposits At Risk

Tyler Durden's picture

When we reported that Bank of America will be the first bank to institute debit card fees we made the following less than insightful observation: "The problem is that the bulk of depositor clients will simply walk away from Bank of America (which had $1,038 billion in deposits as of June 30), and any other institutions that piggy back on this, and from a game theory perspective, everyone has to do it, or nobody will do it." Well, Citigroup, which had no other choice, has just decided to follow in BofA's footsteps, which i) proves there is indeed a collusive move of desperation by the bank cartel, which in a normal country would see at least a statement from Eric Rip Van Holder, and ii) our thesis about America's impatience with petty theft - they are more than ok with grand scale larson such as that by the Fed via shadow inflation and currency devaluation, but when it comes to paying up an additional $5/month, well, just look at Netflix, which instituted a $6/month price hike two months ago... and is now fighting for survival. As for the exemption requirements, they will likely be the same as Bank of Countrywide Lynch's: either have a mortgage with the TBTF behemoth, or have $20k in a deposit account - both which will likely not be much of a help to 90%+ of the bank clients. The biggest problem is that suddenly at risk are $1.9 trillion in deposits - $1 trillion at BofA, $866 billion at Citi. While the financial crisis did little to dent the banks' deposit buffer, it will be highly ironic if it is an act of the banks themselves that begins the great bank run that resets it all...

From the LA Times:

Another day, another new bank fee.


As the uproar swelled over Bank of America Corp.'s planned $5 monthly charge for debit card use, megabank rival Citigroup Inc. was notifying many Citibank customers that they soon would have to start paying for their checking accounts unless they maintained significantly higher balances.


Letters are going out across the country alerting Citi customers of account changes, said the bank's retail banking chief, Stephen Troutner. In many cases, that means customers will have to maintain fatter balances to avoid fees, although Troutner said a basic account option makes dodging charges easier.


Higher fees are the new reality in retail banking, where regulations adopted in the aftermath of the bank bailouts have reduced revenue from several controversial fees by billions of dollars. At the same time, banks have seen their lending income decline due to the sluggish economy and low interest rates.




We conducted extensive surveys with our customers, and no one wanted to pay to use debit cards," Troutner said.


One day after announcing the new debit card fee, Bank of America was inundated with visits, calls and emails from customers.


"We are doing our best to explain the impacts, the value and convenience the debit card offers and how to avoid the fee if necessary," spokeswoman Anne Pace said.


Short of taking out a BofA mortgage or depositing $20,000 with the Charlotte, N.C.-based bank, the way to avoid the fee is to avoid making purchases with debit cards and using them only for ATM transactions, which remain free.

And there you have it: the idiocy that is Bernanke's plan to invert the 2s10s is about to succeed in achieving what HuffPo's failed attempt to get Americans to move their money from TBTFs to community banks tried so hard to do for months.

To keep track of just how suicidal this act will be for the banks, keep track of the weekly M2 numbers which show the non-seasonally adjusted metrics for various checking and debit account categories. We are confident the line chart will start at the top left and go to the bottom right.

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Motorhead's picture

Monkey see, monkey do.  Simians, bitchez!

Pladizow's picture

This will motivate very few Americans to get off the couch, put down the remote and cheese burger and do anything about this.

Until the food supply is threatened the banks will be able to do anything they want to the American sheeple!

smlbizman's picture

jp morgue won't...there to busy running the food stamp scan....was it utah that received a 5mill. bonus from the fed for signing up the most fools....up like 60% in utah last 3 yrs{+ -}

Arius's picture

its just five bucks ... no biggy

Fish Gone Bad's picture

To a great many people it is a big deal. 

CrazyCooter's picture

If anyone wants to shop for a local bank, let me recommend ....

... with the caveat they charge for their data. There is a free hundred page views (see the gray counter in the top left corner) which I think is tracked by IP (so you can shop at home and then at work).

This is my first stop before opening an account. Do invest the time to learn what the various metrics mean.

Lastly, since the page views are limited, print to a digital file (e.g. Microsoft Office Document Image Writer or CutePDF) for future reference.

Happy shopping!



traderjoe's picture

Before I open my next account I'm going to refresh some of the reseach I did previously on how to use the law to prevent the bank from fractionally lending against the money. You have to open the account in a certain way and sign the deposits in a certain way. Sorry to be so general, I'll find a link later...

lynnybee's picture

YES, it is a big deal to many people ........ it's a meal !    so, while the average person is watching their little pennies & dollars, WALL ST. & big investment banks are rolling in money into the billions & trillions .     none of this is right.    

gangland's picture

u dam str8 keep it bottled till it's time k?

macholatte's picture

This is nothing. In 6 months every bank will be charging new fees and the game will be that one charges half a buck less than the other & things like that. Look what happened when the airlines started charging for baggage...... nothing. People get used to it and airlines have a sale by only charging$20 per bag instead of $25 but you get to pay $3 for curbside check in. And for you old timers, remember when a cup of coffe at a restaurant was free, or a dime. Think about it. How many different "fees" can you come up with that didn't exist 10 years ago which sheeple pay and don't even give a second thought to it. How many different taxes are there on your power bill or phone bill, 4 or 5? If Citi decided to overcharge every one of its 200 million credit card customers by just ten cents that's twenty mill a month they make and who's going to spend the time to complain about ten cents.

Maybe Tyler can get back to us in 90 days to let us know just how many sheeple left the barn. I'm guessing less than 2% will change banks., then get hammered by the new bank.  JMHO

donsluck's picture

I don't think you are correct. The response to baggage fees was massive increases in carry-on luggage and a big surge of people flying Southwest (two, count them, two free bags). At <1% interest, a $5 a month fee has a physicological importance. This could mean a flight to hard cold currency, a strong deflationary phenomenon, and the opening salvo against the current war on cash.

macholatte's picture

Name 2 airlines that went out of business because they charged for baggage. You can't because it didn't happen.

mjk0259's picture

I can only think of two that haven't gone out of business for one reason or another.

Cabreado's picture

"To a great many people it is a big deal."
"Its just five bucks ... no biggy"
"This will motivate very few Americans to get off the couch"

All true.

But we ain't goin' nowhere but down 'til a critical mass reacts on Principle.

Down we go...

mfoste1's picture

dumbass, yes it is.....over time they will consistently increase fees. Whatever, have fun giving your fiver to keep the bank solvent. I closed my account yesterday. I already bail them out with my taxes, I wont do it again.....

AldousHuxley's picture

I'd say short BAC, but you know Fed/Treasury is going to bail them out now that Buffett's money is involved.


Best thing you can do is protest at your local bank of america

and at your local Fed



mfoste1's picture

fuck him too....hes on his way out anyways

CrazyCooter's picture

I was very active in the Tea Party before I left Texas and I donated cash to Alan Grayson. He had balls; a democrat I can belive in. Most of the rest are spineless scumbags (along with a good number of republicans).

Suck it liberals.



AldousHuxley's picture

liberals and conservatives need to come together and fight the common enemy.....wall st. in bed with DC resulting in corruption.


Elites don't give two hoots....they donate to BOTH parties.


USMC vets are even getting is about the 99.9%

RSloane's picture

Of course the Fed is going to bail them out. Otherwise we couldn't afford the Uncle Warren & Barry show.

duo's picture

I remember opening my first checking account in 1980.  There was a $3/month fee then, but there were not that many ATMs (and they were free).  $3/month in 1980 is about $10 today.

It's the equivalent of taking a leech off your right arm and putting it on your left.  It's still living off of you.

Id fight Gandhi's picture

What was your interest rate then?

In 1980 you could get a decent rate just holding cash in the bank. I'd NEVER paid a fee for checking even now. Banks used to need deposits to lean out and make business loans, mortgages and such, now uncle sam just feed them.

Quaderratic Probing's picture

Your Right $5 is nothing so let them have $500 per month and as long as the interest curve is sub zero let them have a 15% per year surcharge to hold your savings. Have we not got it yet its their GOD given right to survive at our expence.

kito's picture

Bank of Apocalyptic Collapse

Cathartes Aura's picture

Oregon has a scheme to pay mortgages for a year too. . .

New_Meat's picture


"...was it utah that received a 5mill. bonus from the fed for signing up the most fools..."

Nyet: Utah, Da: Oregon e.g.: $5MM 'Performance Bonus' and they wonder why they get more of something that they subsidize.

- Ned

scatterbrains's picture

Agreed and I'm sure both BAC and C did their homework with studies and testing to determine how far amirkans can be pushed, bent over and pic-pocketed and have rightfully concluded that peeps will do nothing about it.

Dr Hackenbush's picture

oligopolist can afford to have others do thier homework  

CrazyCooter's picture

<AdjustsHisCynicHat>Actually, this is a game with BAC stock ... why is BAC the first to announce this? Clearly this would not happen if all banks did not collude to charge the same across the board. Thus, this is dip before TPTB jack BAC stock prices to the fucking moon.</AdjustsHisCynicHat>

If you trade this, you are fucking crazy (I don't know what I am talking about - thus my cynic tags), but the fact that BAC is on the ropes with Countrywide liabilities and so forth screams to me manipulation down ... then up. This is pure stupidity otherwise.

Markets are broke, best of luck!



Cliff Claven Cheers's picture

Yeah, well Normie, it is the information age. We can receive up to minute stock prices, medical breakthroughs, political upheavals from all around the globe, 'course we'd have to turn off the cartoons first.

You know, uh, American cheese is one of the world's finest cheeses.

Looney's picture

That's it! I'm moving my money to the nearest Sperm Bank. I'm not sure whether the Sperm Bank's ATMs are equipped to handle my DEPOSITS...

Michelle's picture

Credit Unions! Find one near you!

Looney's picture

I must've highlighted the wrong word. That should've been Sperm instead of Deposits... or BOTH?  ;-)

Mia Culpa, Michelle!

bid the soldiers shoot's picture


The least popular topic here at ZH is the Fed. That includes Bernanke, Geithner, Obama, Greenspan and tout Wall Street.

The next most unpopular topic and, not coincidently, is related to the first, the Jews. From the Rothschilds, to Bernard Baruch and Henry Morgenthau, jr. all the way back to Fagin, Shylock and Haym (Jamie) Solomon.

To your point. Sperm Deposits are the third most unpopular topic of discussion at ZH. There is quite a large faction of commentators of the female persuasion here, who make up the ZH chapter of the Junior Anti-Sex League, and Sperm Deposits of any size or shape are anathema to them.

If you are a woman they probably won't hurt you. If you're a man cross the street if you see them coming. If you don't, you might be able to hit the D above high C. /sarc/ :o)

RSloane's picture

Yup, credit unions all the way.

bankonzhongguo's picture

I went in to BOA today and took out $70,000 cash.

Made them "order it" and waited 2 hours - bullshitters - its in the vault - assholes.

They did EVERYTHING to keep me.

They wanted to just cut a cashier's check, but I said 'NO WAY.'  Cash Bitchez!

They told me that I had enough in the bank that I would not be subject to the fee.

I told them I was taking it out on behalf of all the little people that they were (continuing) victimizing.

I am sure that earned me a SAR, rather than a CTR.

I expect a vist from the FBI in 3 weeks.

I am not sure I am going to put it in another bank.

Somehow I like the idea of having $100,000 sitting in my safe at home, rather than the bank.

In this economy cash is king, except now having cash makes you a terrorist - having cash money makes you a terrorist. 




Joseph Jones's picture

Cash is OK for Rabbis.  Change your affiliation. 

MarketWatchTerrorist's picture

By law they had to report that to DHS/FBI/local and state law enforcement under the PATRIOT Act.  It will merit an investigation into you.


They will look at:

1. phone records

2. business and financial records

3. political contribution history

4. memberships in any suspicious organizations

5. marital status

6. social circle

7. web history (probably just a URL review pulled from your ISP)


Most likely you're a boring non-threat.  They'll quickly file your cash withdrawal  away for future reference, but otherwise do nothing.  The whole process should only take 2 hours.

Dingleberry's picture

Correct.....but 5 bucks is just the start. Pretty soon it will be 10, then 15......the camel nose is in the tent. BTW, why don't people use reward credit cards and charge everything? I get back about 800 bucks a year back, which covers most if not all the interest I paid. 

Mike in GA's picture

"Rewards" from "reward" cards are paid by the merchants you do business with.  Banks do not give you 'free money' even though their advertising leads the unsuspecting citizen to think so.

Many small businesses, already suffering in this low margin environment, are barely hanging on and these "reward" cards are part of what eats up the margin.  If these cards were used exclusively and for every transaction as you suggest it would still serve to further the income of the banks and erode the margins of your local merchant. 

Best idea remains migrate to small community banks and credit unions and reduce as much as possible any "giant monster mega-bank"credit card use. (thanks to Clark Howard for his favorite phrase)

donsluck's picture

And use cash. Cash. Cash. Hello out

DosZap's picture

For everything except utilities,and CC Pmts.

Never catch me without at least $300.00 in my wallet, ever.

Which brings up a new found discovery on my part.

I got tired of only being able to get $300.00 every 24 hrs from my account.

So I went to the Bank, and asked if there was a reason for only a $300.00 daily 24hr W/D amount/period.

They said it was for my safety, and so the machine would not be sucked dry by a few customers.

I told them I wanted it raised to $1,000.00 per W/D.

Took a bit of doing, but they did it.

A year later(after the '08 meltdown), I tried to W/D a $1k,and it would not give it to me.

Again , I went to the bank, and asked HOW it was changed w/out notification, and why it was changed.

They said the limit had been reset from the Top. Keeping all the cash in house possible, and not having to carry as much in house.

Cloud9.5's picture

We will move our money to a credit union Monday.  No big deal.  It's just a few thousand.

gangland's picture

but did Obama really warn main street voters that were desperately seeking someone, anyone to be on their side?

of course not, instead, as any politician would, he used the information to maximize his money operations in order to get elected.

In this sense he betrayed himself, the democrat legacy and worse, he put up for pawn, the legacy of mlk and malcolm x, and hundred’s of years of civil rights wars against elites.