Citibank agreed to suspend its plan to charge fees on certain checking accounts with the New York Attorney General’s office. The fees would have affect over one million of its customers.

The settlement was reached after Citigroup failed to provide adequate disclosure of the fee increase and didn’t offer a free checking program long enough before implementing the charges.

The fees would have cost customer between $100 to $120 a year.

Account fees had become an increasing source of revenue for banks in recent years as loan losses piled up and customers cut down on their borrowing during the recession.

Citigroup was planning to charge customers fees ranging between $7.50 and $9.50 a month if combined balances in Citi accounts fell below $1,500. Customers were also facing per-check charges of between 50 cents and $1 after the first 10 checks written each month.

The fees were going to be applied to “EZ Checking” and “Access” checking accounts.

Customers who signed up for one of the free checking accounts between Jan. 1, 2009 and Nov. 5, 2009 will not have to pay fees through the end of the year. The per-check fees will be waived for customers until Jan. 31, 2011.

“EZ” checking customers who signed up for their accounts before Jan. 1, 2009 will also avoid the per-check fees.