Home > Personal Finance > Checking Account Fees Too Confusing, Study Finds

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Though checking accounts are one of the most popular types of banking services consumers have in their names, new data shows that they can still be quite risky for users.

Currently, about 90 percent of all American adults have their own checking account, and many have more than one, according to new research from the Pew Charitable Trusts’ Safe Checking in the Electronic Age Project. These accounts are typically the cornerstone on which consumers build their household financial management plans, and are therefore of extreme importance.

But despite the significance these accounts carry for most of the people who use them, many are still subject to significant overdraft fees and other charges that can seriously endanger their finances if they are not careful in managing them, the report said. In 2011 alone, consumers lost an estimated $29.5 billion to overdraft fees.

The research showed that in general, the financial institutions administering these types of accounts do not summarize the policies and fees associated with them in a single, concise and clear format, the report said. This will help customers to better understand the costs they may face for everything from managing their account on a monthly basis to overdrawing it.

In addition, the study also found that certain overdraft fees have increased considerably, and the way in which the nation’s 12 largest banks order transactions on these accounts does not have to be chronological. Therefore, banks can rearrange consumers’ transactions so that they can milk more overdraft fees from their accounts, and do so without giving the consumer any notice of the practice.

Further, many banks are now using a number of different terms to describe overdraft fees, the report said. These include bounce protection, courtesy fee pay, insufficient funds, non-sufficient funds, optional overdraft protection service transaction, paid NSF, unavailable funds fee, and more.

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For these reasons, it’s generally advised that consumers take the time to carefully review not only the agreements they have with lenders, but also with their financial institutions. Doing so may help to give them a better understanding of the true cost of whatever accounts they have in their name, and therefore determine whether each is in their best financial interests going forward.

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