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Compare checking around the US

By David McMillin · Bankrate.com
Thursday, November 14, 2013
Posted: 4 pm ET

A new study from The Pew Charitable Trusts, a nonprofit organization that aims to improve public policy, reveals that not all checking accounts in the United States are created equal.

Pew has been a staunch advocate of checking account transparency since it began to tackle the challenge of overwhelmingly long and confusing checking account disclosures. In 2011, the average length of these documents was a whopping 111 pages, making them nearly impossible for any consumer to read completely. In response, the organization developed a simple, one-page summary disclosure box to make checking easier to understand.

Pew's new study, "Checks and Balances: Measuring Checking Accounts' Safety and Transparency", reveals that many banks still haven't embraced easy-to-understand checking accounts. The study looked at 36 of the biggest banks in the country, with the results varying in different states. For example, 68 percent of big banks in New York have adopted Pew's disclosure box. In Ohio, that figure falls to 38 percent, and in Tennessee, it drops to a measly 22 percent.

"The bottom line is that, when it comes to banking, it matters where you live," says Susan Weinstock, director of Pew's Safe Checking in the Electronic Age Project.

Of the 36 banks involved in the research, Weinstock says only 13 have adopted the disclosure box. However, Weinstock and Pew want banks to do more than offer simple account terms. The organization also wants banks to eliminate the potential for account holders to overdraw their accounts at ATMs or while making point-of-sale transactions at retail stores. In addition, they are asking banks to stop re-ordering transactions in a manner that can result in more costly overdraft fees.

While some members of the banking industry are already revising their checking terms to become more consumer-friendly, no banks in the study adhered to all of Pew's best practices.

"It is important to note that all banks have room for improvement," Weinstock says.

To spur that improvement process, the organization is recommending that the Consumer Financial Protection Bureau, or CFPB, begin to require the entire banking industry to adopt easy-to-understand account summary disclosure boxes, make their overdraft fees reasonable and proportional to what they actually cost the bank and prohibit transaction re-ordering.

What do you think? Will the CFPB act on the recommendations and make checking clearer for consumers across the country?

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1 Comment
Ellen
November 18, 2013 at 1:50 pm

I agree that overdraft fees are obscene and desperately need to be regulated/reduced by the Federal Banking Commission. While I understand that banks want their account holders to be responsible with their money, charging outrageous fees will not improve the account holders position.

I have a pre-negotiated monthly rate for my cell phone bill and I authorized this company to withdraw those funds from my checking account on a specific date each month. In September of this year the cell phone company withdrew in excess of four times the amount I had authorized and they withdrew the funds five days before the date we had agreed upon and this withdrawl put my checking account into an overdraft position. In addition because my cell phone company made this error, five other transactions that I had authorized were also presented this particular day and therefore I was charged five additional overdraft fees of $35 each (two of these transactions were less than $5.00. By the time this day was over my checking account was in excess of $750.00 overdrawn. I did dispute the charge through the bank with my cell phone company. However, this dispute process does take 10 days because the bank sends a letter to the company in question to advise them that the customer is disputing the balance withdrawn and they have 10 days to respond. My cell phone company did not respond within the allotted 10 days so after 8 days my bank issued what they call a provisional credit. After 10 days when my cell phone company still did not respond the bank finally credited the entire amount the cell phone company withdrew as well as all of the overdraft fees back to my account. My bank did pay each of balances for each transaction presented that day only because I had the funds available in my savings account but it is their policy to refuse to pay these transactions if you do not have an account with them equal of in excess of the balance of each transaction presented which could do serious damage to your reputation if you did not have the funds available. Trying to straighten out this sort of problem could lead to a real nightmare of unnecessary paperwork and hours of conversations/arguments...it's not all just about money. I really think the Federal Banking Commission needs to take a long hard look at banking practices in general but particularly the cost of overdraft fees. In my case the cell phone company made two errors (I did not make the errors), it is not always the account holder's fault and it is time that banks realize that all humans make mistakes (including accounts receivable clerks at corporations) instead of being so hard-nosed all of the time toward their customers.

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