The enticement and curiosity induced by  the term “free” is universal. Whether it is free shipping, a free lunch, or a free checking account, most of us will be drawn to open the envelope, call the number, or click to read more about the offer. But in the case of a free checking account offer, is free really “free”?

Citibank customers who opened an EZ Checking or Access Checking Account over the past several years were promised just that – free checking services, provided the customer signed up for direct deposit or made at least two online bill payments per month. By agreeing to continue to meet these conditions, these account owners would not be charged the monthly maintenance fees ranging from $7.50 to $9.50, as well as avoid any per-check charges. Certainly a reasonable enticement, and one that many folks decided to take advantage of. And if you’ve ever changed banks and checking accounts, you know that doing so can be a time-consuming effort to reset all your automatic bill payments to new account information.

But lo and behold, on November 2, 2009 Citibank announced  that effective February 1, anyone who didn’t have an average balance of at least $1,500 in their combined accounts would have to pay monthly fees or per-check charges. The advertisements for the free checking promotions located online and in the branches themselves apparently lacked the disclosure that this freebie was subject to termination at the bank’s discretion. So what was giveth so freely, was just as freely to be taken away… but not so fast.

After the New York Attorney General’s office made inquiries about the amount of notice Citibank had given customers about the changes, they decided that Citi failed to adequately notify affected consumers about the change.  As a result of the action, Citi agreed to allow people who had signed up for the accounts from January 1 to November 5, 2009, to keep their free checking until January 31, 2011.  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.

For a full explanation of the conditions outlined in the attorney general’s agreement with Citi, read this letter dated February 1, 2010.

Indian givers? Citi made promises that people were banking on (pun intended), and then changed the terms in mid-stream. It is likely that “free” checking accounts may become an endangered species soon, now that revenue from overdraft charges is likely to be significantly reduced with the new laws.  

Has your bank recently tried to change any of your account terms? For most of us, the answer is a resounding yes. Share your story with the rest of us by leaving a comment!

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