Citibank customers pay £10 fee
19 February 2007
Citibank will automatically start charging current account customers a £10 fee unless they contact the bank to tell them not to.
The move comes on the back of comments from incoming Nationwide chief executive, Graham Beale, who said today that he believed charging fees could be a fairer proposition than the current system of free bank accounts and high charges.
Customers with Citibank's free Sterling Current Account will be automatically switched to the new packaged Citibank Plus account which charges £10. Although the bank will contact customers about the planned changes, it is the customer who will have will have to opt out.
The Citibank sterling account is closing, and customers who opt out will be transferred back to a new free current account, the Citibank Access Account, which is being launched at the same time.
A spokesperson for Citibank denied the changes were designed to raise revenue. He said that the decision had made after conducting research among Citibank account holders, who tended be more affluent than the average current account holders.
For £10 a month account holders will be offered Worldwide travel insurance for themselves and a partner, mobile phone insurance and ID theft insurance. The spokesman said this had been calculated at £450 a month.
Citibank has around 1m UK customers holding credit cards or current accounts so it is a relatively small player in the current account market.
Research conducted last year found that around 16m people believed they had been automatically upgraded to a packaged account with their consent.
The revelations about Citibank come on the same day as the incoming Nationwide chief executive's comments that charging customers a monthly fee might be a fairer banking model.
'It's not free to run a branch or an ATM, so what it means is that when you apply charges to delinquent accounts they bear the large proportion of that cost,' Graham Beale said in newspaper reports today. 'In an ideal world those costs would be shared.'
Mr Beale, currently Nationwide finance director, will become chief executive in April. He said that the building society would monitor the movements of the rest of the market before making any changes.
This month, First Direct became the first bank in the UK to introduce a fee to all customers who were not depositing a salary of at least £1,500 into their current account each month.
The move provoked an unprecedented response from This is Money readers who vowed to switch their accounts away from the bank that has always marketed itself as being 'the UK's most recommended bank'.
SOURCE: Sascha Hutchinson, This is Money
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