Tired of getting hit with surprise fees from your bank? Sen. Charles Schumer (D – NY) is calling for a bill requiring banks to place all information about checking account-related fees and charges in an easy-to-read format on checking account applications and promotional materials.
The bill would do for checking accounts what the “Schumer Box” has done for credit cards. In 1988, Congress passed a law, introduced by Schumer, requiring credit card companies to summarize their interest rates, transaction fees and annual fees in a box at the top of credit card applications.
“If banks aren’t willing to provide clear, easy-to-read, up front information on the fees that come along with the checking accounts they offer, then we will federally require they do so,” Schumer announced earlier this week.
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Under Schumer’s plan, banks would be required to clearly disclose all fees they charge to checking account customers, including minimum balance fees, overdrafts and ATM fees. The bill also would require banks to describe fees using a universalized lexicon. Right now, the nation’s 10 largest banks use seven different terms to describe overdraft fees, the Pew report found, making it difficult for consumers to compare costs.
“It’s absurd to require banking customers to sift through a tomb of highly technical legalese to unmask dozens upon dozens of banking fees,” Schumer said. “Consumers have a right to know what they are signing up for, before they get hit with surprise fees.”
In another report on bank fees, this one by the U.S. Public Interest Research Group, 62% of bank branches surveyed failed to respond to a simple request for their fee schedules, as required by the Truth in Savings Act. Another 22% gave wrong or incomplete information.
Consumer advocates cheered Schumer’s announcement.
“I think it’s a fantastic idea, and long overdue,” says Gerri Detweiler, Credit.com’s personal finance expert. “Before the Schumer Box, you couldn’t figure out what a credit card cost you until you got it in the mail. Now we have the same problem with checking accounts.”
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Image: MacRonald, via Flickr