Credit CARD Act: Why We Closed Our Citibank Accounts

by Les@SpillingBuckets on February 22, 2010

Last week I wrote about the Credit CARD Act of 2009 and it seems like the aftereffects of this bill are rippling as the countdown until implementation continues.

Saturday we received a note from Citibank letting us know that both of our currently free (with direct deposit) accounts would no longer be free, but instead would have monthly service fees unless we maintained higher balances.

This new notice came days after we got an additional note announcing a new annual fee on one of our credit cards. We aren’t the only ones – this CNN.com blogger got the exact same letter we did from Citi, but decided to risk a charge rather than simply canceling the account. She would rather avoid a ding in credit score than close the account while we are the opposite. We don’t plan on any new debt so a pristine credit score doesn’t matter a whole lot to us.

In the past Ryan and I would use our Citi accounts to get paid from various mystery shop sites and to pay utilities and other bills. I would send 10% of my paycheck to my account to cover small monthly expenses but we never maintained a balance for very long. We would also keep a buffer emergency fund for small emergencies (~$1,000) to cover small unexpected expenses.

Well, they’ve now lost our business entirely: the Citi premier pass card is closed, and as of next week all Citi checking and savings accounts will be shuttered.

Today I received a Customer Satisfaction Survey from Citi.com regarding my call to a customer service representative to cancel the card. I filled out the survey answering honestly but harshly as to why they have now lost almost all of our business.

As soon as my next paycheck clears the account will be closed for good. I wonder how many people will read the notes and fine print to get out of these fees, and how many will just go along for the ride.

Here’s the deal: Government views banks like Citi as evil money grubbing step-on-the-little-man institutions thus it passed regulations to limit their activities. Now, like tough money love we are certainly for tighter lending requirements as our opinions of debt have soured quite substantially, but let’s just look at the effect the regulation has had on us (a little guy):

Our free credit card now has an annual fee (account closed)
Our free online checking and savings accounts now require substantial deposits or charge a fee (2 checking accounts and 6 savings accounts closed)

Thank you Congress for yet another helpful bill. I am sure that the CARD act will really help save consumer’s time and money.

“I’m from the Government, and I’m here to help.”