Citizens, Cullen/Frost join parade of banks eliminating NSF fees

Two regional banks — Citizens Financial Group and Cullen/Frost Bankers — announced plans Monday to eliminate fees paid by customers who bounce a check or have a debit card purchase rejected.

Providence, Rhode Island-based Citizens and San Antonio-based Cullen/Frost are the latest in a long line of banks that have pledged recently eliminate such charges, which are known as nonsufficient-funds fees.

NSF fees are distinct from overdraft fees, which get assessed when banks approve purchases by customers who spend more money than they have in their accounts.

Citizens Financial and Cullen/Frost Bankers both plan to eliminate nonsufficient fund fees, in addition to other changes that are also expected to reduce their overdraft-related revenue.

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Citizens and Cullen/Frost also announced other moves Monday that figure to erode the revenue that they collect from cash-strapped customers. For example, the parent company of Frost Bank said that it is expanding access to a 14-month-old program that waives overdraft fees when customers overdraw their checking accounts by $100 or less.

“Combined, the expansion of these features means Frost expects to forgo as much as $3.5 million per year,” Jimmy Stead, chief consumer banking officer, said in a press release.

U.S. banks — particularly large and midsize institutions — have been taking steps to curtail their overdraft fee revenue in the face of pressure from Biden-era regulators and competition from neobanks that don’t charge the fees.

Citizens, which operates mostly along the East Coast, said Monday that it plans to eliminate savings overdraft protection fees by the end of the second quarter. And in a change that may help customers solve cash-flow problems without paying fees, the $192.1 billion-asset bank said that customers who receive their paychecks by direct deposit can now access those funds up to two days early.

Citizens, which has previously taken other steps to reduce its reliance on overdraft fees, will eliminate nonsufficient-funds fees by the end of the year, the bank said.

“Today’s announcements demonstrate our ongoing commitment to serve as our customers’ trusted financial partner,” Brendan Coughlin, the head of consumer banking at Citizens, said in a press release, “as well as add value to their daily lives by enabling them to get paid even faster than their employer scheduled.”

Meanwhile, Cullen/Frost is expanding access to its $100 grace feature to include customers who do not have direct deposit set up on their account. The $51.3 billion-asset bank said that since April 2021, when it made the feature available to certain customers, more than 64,000 of them have benefited.

Cullen/Frost signaled in April that it would be offering more customers the ability to avoid the charges. At the time, bank executives told analysts that the expansion of overdraft-fee relief would cost about $2 million a year in lost revenue.