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Do
checking accounts need to come with a disclosure label,
something like the calorie information you can find on a
bag of chips?
“I love
nutrition labels; I think they’re great,” said Susan
Weinstock, director of the Safe Checking in the
Electronic Age Project for the Pew Health Group in
Washington, D.C.
Do you
know your bank’s ATM fee at another location? Or the
exact fee you’d be charged for an overdraft?
Banking
fees can ding you in all sorts of odd places.
One
reader complained about being hit with a $6 fee to cash
a payroll check that was direct-deposited in a bank
where she had closed her account. She paid $3 to cash
the check at a Walmart.
Victor
Cassell, 64, of Taylor, Mich., was irked by a $9 charge
for making three more ATM savings withdrawals than his
bank allowed in a month.
“I’m
sure it’s somewhere in the paperwork they sent me —
if you want to sit down like a lawyer and scrutinize
every paperwork they send you,” Cassell said.
Consumer
groups now want more and better disclosure of such bank
fees.
Weinstock
said checking accounts could be more competitive if
consumers really understood all the different fees that
can be charged by banks and credit unions. She
recommends a one-page disclosure box on bank websites
and in branches, much like we’re now seeing from
credit-card issuers.
Now, the
median length of checking account disclosures is 111
pages, according to a Pew study of the nation’s 10
largest banks. These are the account agreements, addenda
to account agreements and fee schedules found online.
Pew is
urging banks to voluntarily adopt a model disclosure box
including the fees for:
—Using
the bank’s ATM;
—Using
another bank’s ATM;
—Stopping
payment;
—Closing
an account;
—Overdrafts.
Pew is
also urging the new Consumer Financial Protection Bureau
to require such disclosures in an easy-to-read format.
Raj Date,
special adviser to the Secretary of the Treasury for the
Consumer Financial Protection Bureau, said in a
statement that checking accounts and debit cards often
come with unexpected costs.
“With
upfront and easy-to-understand information, consumers
can comparison-shop,” he said.
The
Consumer Financial Protection Bureau, already working to
simplify mortgage disclosures, also plans to launch a
project focused on increasing checking account
transparency.
But the
banking industry says the fees are already spelled out
— and “easily obtained,” said Nessa Feddis, vice
president and senior counsel for the American Bankers
Association.
Greg
McBride, senior financial analyst for Bankrate.com, said
some fees are easy to find, such as the monthly
maintenance fee. But it’s hard to research others,
such as the charge for a copy of a previous statement.
To see
what I could learn and how easily, I visited four banks
in the Detroit area. Nothing was exactly sitting out on
a table.
At
Comerica, a teller was able to hand me a folded brochure
of “Personal Services and Charges” effective Feb. 1,
2011.
At Bank
of America, the teller told me to go to one of the
personal bankers at a desk. Only one banker was at a
desk that Monday morning, so I had to wait while the
woman ahead of me dealt with a real mess of overdraft
fees.
After she
was done, I received a 14-page booklet for the
“Personal Schedule of Fees” effective Aug. 1, 2011.
At a
Flagstar branch, I waited for an 11-page computer
printout of “Deposit Account Disclosures.” And yes,
that took a few minutes, because, I was told, the
printer was slow.
At Chase,
I received a 13-page booklet called “Welcome to a
Better Banking Experience” from the personal banker at
the front of the branch. The booklet included
information about loans and other products.
Easy to
read? Well, one example: You had to go to Page 8 of the
Chase booklet to read that a fee would be charged any
time you stopped payment on an item in your account. It
didn’t say how much until Page 9 — $34 per item or
$27 if you stop payment via Chase.com or with the Chase
automated phone system.
A
footnote states that the fees could be waived on certain
types of accounts. Page 10 goes on to say that a Chase
Premier Platinum Checking account has no stop-payment
fee.
Odd as
this might sound, the Chase booklet is fairly clear
because it offers one page listing more than three dozen
fees. The Comerica brochure also lists fees in one
grouping and provides an 800 number for questions.
The
Comerica brochure said there would be a $10 fee for
closing an account within six months of opening it. But
when I called the 800 number, I was told there was no
such fee.
When I
told the woman it was in the brochure, she put me on
hold for several minutes — and then returned to say
that yes, Comerica did impose such a fee in its
southeast Michigan market.
Chase’s
brochure said there would be a $25 fee for a new account
closed within 90 days.
Bank of
America said it does not charge a fee for closing an
account.
Susan
Cherry-Bergesen, corporate communications manager for
Flagstar, said there is a $20 fee for each account
closed within 180 days of opening it. She noted that the
information is on page 31 in the disclosure guide on the
website.
Weinstock,
of the Pew Health Group, said more needs to be done to
make fees clearer.
She noted
that banks often used different names for the same fee
or service, put the information in different documents,
different media (Web or hard copy), and did not offer a
clear summary of key points.
“Many
of these documents are not user-friendly, with much of
the text densely printed, difficult to decipher, and
highly technical and legalistic,” Weinstock said in
testifying about the issue before a U.S. Senate
subcommittee.
Pew has a
proposal for a disclosure chart. But Feddis said the
Pew’s proposed model is “incomplete, not
consumer-friendly and fails to comply with regulatory
and legal requirements.”
So I’d
say it’s fair to expect some debate here. In the
meantime, ask your bank for its schedule of fees —
even if just to brush up on how to save a bit of money
by avoiding them.
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