A growing number of consumers have raised complaints alleging that Citizens Bank continues to debit monthly maintenance fees from checking accounts even when those accounts carry a negative balance, effectively pushing customers deeper into the red. While the specific claim about monthly fees on sub-zero accounts has not yet resulted in a widely publicized class action settlement, it fits squarely within a pattern of aggressive fee practices that have already cost Citizens Bank more than $146 million in settlements and penalties over the past decade. For example, a customer with an EverValue Checking account carrying a negative $2 balance would still be hit with a $5 monthly service charge, dropping them to negative $7 — which could then trigger additional continuous overdraft fees on top of the original maintenance charge.
Citizens Bank’s fee controversies are well documented. The bank paid $137.5 million to settle claims that it reordered transactions to maximize overdraft fees, was hit with a $9 million CFPB penalty for mishandling billing disputes, and has faced legal challenges over its sustained overdraft fee structure that stacks $30 charges on top of an initial $35 overdraft fee. The allegation about monthly maintenance fees on negative-balance accounts represents the next chapter in what consumer advocates describe as a compounding fee trap — where one charge begets another, and customers who are already financially vulnerable end up owing the bank far more than they ever spent.
Table of Contents
- Did Citizens Bank Really Charge Monthly Fees on Accounts Already Below Zero?
- How Citizens Bank’s Fee Stacking Can Turn a Small Overdraft Into a Major Problem
- Citizens Bank’s $137.5 Million Overdraft Settlement and What It Revealed
- What Affected Citizens Bank Customers Can Do Right Now
- Why Federal Regulators Have Struggled to Stop Bank Fee Stacking
- Citizens Bank’s HELOC Fee Settlement Signals Broader Accountability
- The Future of Bank Fee Litigation and What to Watch
- Frequently Asked Questions
Did Citizens Bank Really Charge Monthly Fees on Accounts Already Below Zero?
Citizens Bank’s published fee schedule confirms that monthly service charges are assessed on a recurring cycle regardless of account balance. The bank’s One Deposit Checking account carries a $9.99 monthly fee that is only waived if the customer makes at least one deposit per statement period. The Quest Checking account charges $25 per month unless the customer maintains $5,000 in monthly deposits or $25,000 in combined balances. The EverValue Checking account charges a flat $5 per month with no waiver available. None of these fee disclosures include an exception for accounts that have already fallen below zero.
The practical effect is straightforward. If a checking account is overdrawn by even a small amount and the monthly fee cycle hits, the bank debits the service charge anyway, increasing the negative balance. That larger negative balance can then trigger Citizens Bank’s continuous overdraft fee of $1 per day once the account has been overdrawn by more than $3 for five or more consecutive business days. Compare this to banks like Ally or Capital One 360, which charge no monthly maintenance fees at all, and the disparity becomes stark — a customer who might have been able to recover from a small negative balance at a fee-free bank instead finds themselves in an escalating debt cycle at Citizens Bank. The consumer complaint pattern appears to center on the argument that debiting a fee from an account with no available funds is functionally identical to extending credit without the disclosures required under federal lending laws. Whether courts will agree with that characterization remains to be seen, but it is the kind of legal theory that has gained traction in other banking fee cases.
How Citizens Bank’s Fee Stacking Can Turn a Small Overdraft Into a Major Problem
The real damage from monthly fees on negative accounts comes not from any single charge but from how multiple fees interact. Consider a customer whose Citizens One Deposit Checking account dips to negative $1 after an unexpected debit. If they fail to make a deposit before the statement period closes, the $9.99 monthly fee hits, bringing the balance to negative $10.99. Because the account is now overdrawn by more than $3, the continuous overdraft fee of $1 per day kicks in after five business days. Within two weeks, the customer could owe more than $20 in fees on an account that was originally overdrawn by a single dollar. However, this scenario gets considerably worse if the initial overdraft was caused by a transaction that triggered Citizens Bank’s $35 per-occurrence overdraft fee. In that case, the customer faces the overdraft fee, the monthly maintenance fee, and the daily continuous overdraft fee simultaneously.
Citizens Bank’s fee schedule permits up to five overdraft fees per day at $35 each, meaning a single bad day of transactions could generate $175 in fees before the monthly charge even enters the picture. The bank’s sustained overdraft fee structure — challenged in the 2019 case Fawcett v. Citizens Bank (Case No. 18-1443, First Circuit) — previously added three additional $30 charges at four, seven, and ten business days after an overdraft, though the court ruled those fees were not “interest” under federal law and dismissed the usury claims. The limitation here is important: not every customer will experience the worst-case scenario. Customers who opt out of overdraft coverage for debit card and ATM transactions can avoid the $35 per-occurrence fee on those transaction types. But monthly maintenance fees and the continuous overdraft charge apply regardless of overdraft coverage elections, which is precisely the gap that consumer complaints have targeted.
Citizens Bank’s $137.5 Million Overdraft Settlement and What It Revealed
The largest fee-related payout in Citizens Bank’s history came through its participation in the massive multidistrict litigation known as In re Checking Account Overdraft Litigation (Case No. 09-cv-02036), heard before U.S. District Judge James Lawrence King in Miami. Citizens Bank was one of more than 30 banks accused of deliberately reordering debit card and ATM transactions from highest to lowest dollar amount — rather than processing them chronologically — to maximize the number of overdraft fees generated per day. The bank paid $137.5 million to settle those claims.
The transaction reordering practice worked like this: if a customer had $100 in their account and made four small purchases of $10 each followed by one $80 purchase, processing them in order would result in one overdraft on the final transaction. But by reordering the $80 purchase first, the bank could trigger overdraft fees on each of the four $10 transactions that followed. The settlement confirmed what consumer advocates had long suspected — that the fee structures were not incidental but were engineered to extract maximum revenue from customers who could least afford it. This history matters for the current monthly-fee allegations because it establishes a documented pattern. Courts and regulators have already found that Citizens Bank’s fee practices crossed legal lines in the past. When evaluating new claims about monthly fees on negative-balance accounts, that track record provides important context for both judges and potential class members.
What Affected Citizens Bank Customers Can Do Right Now
Customers who believe they have been charged monthly maintenance fees on a negative-balance account have several options, but each comes with tradeoffs. The most immediate step is to file a complaint with the Consumer Financial Protection Bureau at consumerfinance.gov. The CFPB has already taken enforcement action against Citizens Bank once, resulting in a $9 million civil penalty in 2023 for violations of the Truth in Lending Act and Fair Credit Billing Act related to the bank’s failure to properly investigate billing disputes and fully credit customers for unauthorized charges. A pattern of consumer complaints about a specific fee practice can prompt the bureau to open a new investigation. Another avenue is mass arbitration, which McCune Wright Arevalo LLP is currently pursuing against Citizens Bank over overdraft fee practices.
Mass arbitration differs from class action litigation in that each customer files an individual arbitration claim, but the claims are coordinated to create financial and logistical pressure on the bank. The tradeoff is that arbitration outcomes are private and do not set legal precedent, whereas a class action settlement can provide broader relief and public accountability. Customers should also check their account agreements carefully — Citizens Bank’s arbitration clause may require individual arbitration and prohibit class action participation, which is exactly why firms like McCune Wright have adopted the mass arbitration model. For customers who simply want to stop the bleeding, the most practical step is to close the account and negotiate a payoff of any remaining negative balance. Citizens Bank may be willing to waive certain fees as part of an account closure, particularly if the customer documents the fee-stacking pattern in writing. Keeping detailed records of every fee charged, the account balance at the time of each charge, and any communications with the bank is essential regardless of which path a customer pursues.
Why Federal Regulators Have Struggled to Stop Bank Fee Stacking
Despite high-profile enforcement actions, the regulatory framework for bank fees remains fragmented. The CFPB has authority over unfair, deceptive, or abusive acts and practices, but its enforcement priorities shift with each administration. The $9 million penalty against Citizens Bank in 2023 addressed credit card servicing failures, not checking account fees, leaving the overdraft and maintenance fee structure largely untouched by that particular action. Meanwhile, the Office of the Comptroller of the Currency oversees national bank safety and soundness but has historically been reluctant to police individual fee structures as consumer protection matters. The core legal challenge is that most courts have treated monthly maintenance fees as disclosed contractual charges.
If the account agreement says a $9.99 fee will be assessed each month unless a qualifying deposit is made, and the customer agreed to those terms, courts have generally held that the fee is enforceable — even if the account balance is negative. The Fawcett v. Citizens Bank decision from the First Circuit in 2019 reinforced this approach by ruling that sustained overdraft fees were not “interest” subject to usury limits, effectively allowing banks to stack fees without triggering lending-law protections. The warning for consumers is this: until Congress or a federal regulator explicitly prohibits the practice of assessing service charges on negative-balance accounts, the primary protection available is choosing a bank that does not charge monthly maintenance fees in the first place. Several major banks and most online banks have eliminated these fees entirely, making the comparison a meaningful one for anyone currently stuck in a fee cycle.
Citizens Bank’s HELOC Fee Settlement Signals Broader Accountability
It is worth noting that Citizens Bank’s fee problems extend beyond checking accounts. The bank settled for $612,294 over improperly charged usage fees on Home Equity Line of Credit accounts where the account terms specifically prohibited such fees.
That settlement, while smaller in dollar terms than the overdraft litigation, is significant because it established that Citizens Bank charged fees that directly contradicted its own contractual commitments — a fact pattern that could prove relevant if courts examine whether monthly maintenance fees on negative-balance accounts violate the implied covenant of good faith and fair dealing. The HELOC case also demonstrates that Citizens Bank has been willing to settle fee disputes quietly and for relatively modest sums, which may indicate the bank’s preference for avoiding the precedent that a full trial could set. For customers pursuing individual claims, this history suggests that persistence and documentation can yield results even outside the class action framework.
The Future of Bank Fee Litigation and What to Watch
The trend in bank fee litigation is moving toward two fronts simultaneously. On one side, mass arbitration campaigns like the one McCune Wright Arevalo is running against Citizens Bank are forcing banks to defend thousands of individual claims — a strategy that exploits the arbitration clauses banks themselves insisted on.
On the other side, the CFPB under various administrations has signaled interest in capping or eliminating overdraft fees entirely, though the regulatory path forward remains uncertain. For Citizens Bank customers specifically, the next twelve to eighteen months will likely clarify whether the monthly-fee-on-negative-balance complaints coalesce into a formal class action or remain part of the broader mass arbitration effort. Either way, the bank’s documented history of fee-related litigation — spanning $137.5 million in overdraft settlements, $9 million in CFPB penalties, and ongoing arbitration claims — makes it clear that these practices will continue to face legal scrutiny.
Frequently Asked Questions
Can Citizens Bank legally charge a monthly fee when my account balance is negative?
Under current law, yes — if the fee was disclosed in your account agreement and you agreed to the terms. However, whether this practice constitutes an unfair or deceptive act under the CFPB’s authority is an open legal question, and ongoing litigation may change the answer.
How much are Citizens Bank’s monthly maintenance fees?
Citizens One Deposit Checking charges $9.99 per month (waived with one deposit per statement period), Quest Checking charges $25 per month (waived with $5,000 in monthly deposits or $25,000 in combined balances), and EverValue Checking charges $5 per month with no waiver option.
What is Citizens Bank’s overdraft fee?
Citizens Bank charges $35 per overdraft occurrence, up to five times per day. If the account remains overdrawn by more than $3 for five or more consecutive business days, a continuous overdraft fee of $1 per day also applies.
Was there a class action settlement over Citizens Bank’s overdraft fees?
Yes. Citizens Bank paid $137.5 million as part of In re Checking Account Overdraft Litigation (Case No. 09-cv-02036), which alleged the bank reordered transactions from highest to lowest to maximize overdraft fees. More than 30 banks were involved in the broader litigation.
How do I file a complaint about Citizens Bank fees?
You can file a complaint with the Consumer Financial Protection Bureau at consumerfinance.gov. You can also contact McCune Wright Arevalo LLP, which is currently pursuing mass arbitration claims against Citizens Bank over overdraft fee practices.
Should I close my Citizens Bank account if I keep getting hit with fees on a negative balance?
If you cannot bring the account positive and maintain the balance needed to waive monthly fees, closing the account is often the most practical step. Negotiate with the bank to waive accumulated fees as part of the closure, and switch to an account with no monthly maintenance fees to avoid the same problem in the future.