Citibank to introduce £10 monthly charge for current account customers
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Your support makes all the difference.Citibank is to begin charging thousands of customers a £10 monthly fee for its popular current-account service. From 1 April, the bank plans automatically to transfer current-account customers into a new product, Citibank Plus, which will carry a £10-a-month charge.
The bank is justifying the charge on the basis that Plus will offer a range of free benefits, including annual travel insurance and mobile phone insurance.
Customers who don't want the new packaged account will be able to retain their existing accounts and pay no charges, but only if they specifically opt out of the new product.
Citibank's move is the latest threat to free banking in the UK. It follows a series of warnings that current-account providers may begin charging for services. Just before Christmas, First Direct, the phone and internet-based bank, said it would begin charging current-account customers £10 a month unless they deposited at least £1,500 a month.
However, Stuart Glendinning, a director of Moneysupermarket, the analyst, said that automatically moving customers into a fee-charging account represented a new stage in the trend of moving away from free banking.
"It's dreadful customer service," Glendinning said. "Citibank knows that if you ask customers to positively switch into an account like this, maybe 5 to 10 per cent will take up the offer, whereas if customers have to opt out, it's more likely to be 75 per cent or more who end up paying the charges."
Several other banks are currently marketing packaged accounts offering a range of additional benefits on top of basic banking services in return for a fee. Halifax Bank last month launched the latest such product, with a market-topping rate of interest and insurance benefits worth up to £700 a year.
However, banking experts warn that, while the accounts can suit some customers, many people don't actually need the additional benefits on offer, and will therefore pay the charges unnecessarily.
One in four packaged-account customers never use any of the benefits available, according to research published by uSwitch, the price comparison service.
A Citibank spokesman said customers had already been told about the launch of the new account and given until 1 April to decide whether to opt out of the fee-charging product.
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