Federal law now requires greater disclosure of terms, such as fees and rates, for credit cards, but the same is not necessarily true for the checking accounts that consumers may rely on more often in their everyday lives.
In recent years, more attention has been paid to the costs associated with traditional banking, as many financial institutions have increased fees on many accounts to cover those lost to heavier federal regulation. But now, seven of the 12 largest banks in the U.S. are voluntarily giving consumers more information about the fees and terms of their checking accounts, according to a report from Pew Charitable Trusts. SunTrust recently adopted the organization’s checking disclosure summary, and that means that 40 percent of the entire market (by deposit volume) has access to this greater amount of information.
“As more and more banks adopt greater transparency about the fees, terms, and conditions that apply to accounts, consumers are able to educate themselves, understand the products they are using, and comparison shop to find the best product to meet their needs,” said Susan Weinstock, director of Pew’s Safe Checking in the Electronic Age Project. “With more educated consumers, we hope other banks will follow suit and adopt an easy-to-understand format for their information.”
Pew’s research shows that the median length of a checking account disclosure document issued by the 12 major banks prior to its implementation of its own summary was 69 pages. That amount is drastically reduced with Pew’s model checking disclosures.
However, the agency still wants to see the federal Consumer Financial Protection Bureau do more to extend protections for banking accounts like it does for credit cards and loans, the report said. It also urges the CFPB to undertake a study of just how banking practices affect consumers.
[Credit Cards: Research and compare credit cards at Credit.com.]
Experts note that the cost of maintaining a checking or savings account with a large bank has gone up in the past few years mostly because, as a means of staunching revenue losses, these institutions began charging for services that were previously free. Many now apply monthly maintenance charges unless customers meet certain conditions, such as deposit thresholds, which can make such an account more expensive for the average person to afford in general.
Image: liewcf, via Flickr