Pew Says Checking Account Fees Are Still Too High & Complicated

Even though banks have had a whole year since the last time the Pew Charitable Trust looked into potentially harmful practices related to checking accounts, the latest news from Pew indicates those banks haven’t done a whole lot to improve things for consumers.

In its update to the 2010 survey of banks, Pew’s Safe Checking in the Electronic Age Project said banks continue to make consumers muck around in long, confusing documents and that we might not really be aware of the kinds of fees involved in checking accounts.

According to the Chicago Tribune, Pew is calling on anyone who can help to remedy this situation, asking the Consumer Financial Protection Bureau or Congress to create more protections for consumers and make it even easier for consumers to pick their banks based on easy to understand information.

Pew also thinks overdraft penalties as they are are unreasonable, and should be made proportional to how much an overdraft actually costs a bank.

And while some banks have chosen to use Pew’s model checking-account disclosure document, that spells out information for consumers simply, Pew is urging others like Bank of America and Citibank to do so as well. Those banks have said they would introduce the form in the coming months.

It wasn’t just the 10 largest banks that Pew looked at this time — they studied 12 of the largest banks as well as the 12 largest credit unions. The median length right now for account disclosures was 69 pages for banks and 31 for credit unions. That’s a lot of reading — and most people probably aren’t going to settle down and go through all of it.

Pew: Checking accounts still too complex, fees too high [Chicago Tribune]

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  1. Loias supports harsher punishments against corporations says:

    Pew, pew, pew!!

  2. scottydog says:

    Keep a few grand in your account, have direct deposit, pay your bills on time, and don’t overdraft then your checking account will be free and you won’t get hit with any fees.

    • Torgonius wants an edit button says:

      Good morning, Sir,

      Please allow me to introduce you to our ‘You avoided all out other fees” fee. It will help us provide better customer service and enhance your banking experience.

      • Agent Hooter Enjoys Enhanced Patdowns says:

        We like to call it the “House Always Wins” rule. Beyotch.

        • Blueskylaw says:

          Even when the house loses, the government picks up the tab.

          Heads you win, tails they lose.

    • dolemite says:

      My employer doesn’t offer direct deposit, and neither does my wife’s. Sure, I could set up a dummy account, deposit into that and set up a ‘direct deposit’, but…that’s a big hassle. Having 1 bank is hassle enough.

      • qwickone says:

        I find it’s generally a good idea to have more than one bank. If something goes wrong one place, you have other options immediately. I realize there are headaches and costs associated with that, but it’s been my experience that when I’ve run into issues, I’ve been very glad to have options.

      • frank64 says:

        I had that problems as well, I did ask one bank about that (DCU), they told me that they could consider any regular ATM deposit as fulfilling the direct deposit requirement. You could ask around and find a bank like that. I think they just are looking at that to be your main account.

    • castlecraver says:

      I know, right? It’s so ridiculously trivial to have thousands of dollars that one can just let lie fallow month after month, and have an employer who offers direct deposit.

      /s

      • frank64 says:

        The majority of people should be able to keep a months worth of expenses as a back up. I know low wage earners who do, and I know people making much more than me who don’t. My car is 12 years old, and right now I am unemployed. I don’t have cable, and have a very cheap cell plan, I keep my cell phone an average of 5 years. I have a few months of savings and that I don’t have a car payment is saving me from ruin.

        I point this out because ANY post about any sort of personal responsibility seems to bring out a post like yours that always says yeah, easy for you. Yes there are people who are struggling and may not be able to do it, but there are many, many more, who are have not set up a household budget, and believe they needed the newer and the I-phone. Those that are struggling actually would benefit more from some sort of financial plan that means saving a little more. Not being able to say it without the class warfare crap actually does them a disservice.

        • frank64 says:

          A couple of typos, wish there was an edit button.

        • castlecraver says:

          While you, I, or anyone else could probably come up with an anecdote to back up just about any point on personal finance, I’m extremely skeptical of your suggestion that most people affected by bank fees ended up that way primarily because they made over-extravagant purchases. This is really just another re-packaging of the “welfare queen” straw man IMO. Sure, it exists. We all know examples. Is it a huge of a problem as it’s made out to be? Does it need to obscure the big picture? No.

          I admire the fact you’re obviously quite responsible with your finances, and although there could definitely be factors specific to your own life that would render these questions moot, try to see them from the perspective of someone who wouldn’t necessarily have those resources (for example, a spouse’s health plan). With only a month or so of cash in savings, what happens when your 12 year old car breaks down? What happens if you get sick or injured and have to cough everything up because your job doesn’t offer a health plan? These things happen to all of us, and they happen a lot more often than new iPhones being released. Do you really think it’s fine to add insult to injury, to an otherwise responsible person like yourself, if suddenly your savings was depleted through no real fault of your own? Would you really be ok with losing another $10-20 per month until you could build your account balance back up?

          • frank64 says:

            The difference is I have SOME savings, and plan for things like my car breaking down. No one is immune from devastation, but having the savings raises the bar on what would destroy me. Your post made it sound like even having one month is beyond the reach of the majority. I don’t think so, it is very important, and so a person is best off making sacrifices to achieve that goal. That something financially devastating could happen so that is not enough is true, but it raises the bar on what would be a problem and makes it much less likely. My analogy is you can get lung cancer without smoking, but that does not mean you might as well smoke, because you COULD get it anyway.

            There was a report about 6 months back about the % of people who could come up with $1,000 in a month(or something like that). The % was very low. That is the problem, that even may in the middle class could not. Most people should have a serious plan to work towards that goal.

  3. Blueskylaw says:

    Ohhh Big Banks, is there nothing you won’t do to deprive us of our hard EARNED money?

    • frank64 says:

      Those fees are easily avoided by shopping around. The big banks are able to charge them because we are sheep. Many complain and still use them. I know many who say “the fees are high, but I want to keep my money there because………..” They have a choice and have decided the big banks worth it.

      You can avoid the fees at big banks too, but I still think they are much less likely to really work with you if you have a problem. We should all take that into account too.

  4. Costner says:

    I have two checking accounts – one is used for online purchases and never has more than about $100 in it. The other is my primary account where I have my pay direct deposited into.

    I’ve never paid a single penny in fees on either. Never had a bounced check, I’ve never spent more money than I actually have in my account.

    I get a free debit card. I get free checks. I have free online bill pay. I have online banking. I can transfer money between savings and checking with a few clicks. I can access the account from my phone or use an iPad app. The ATMs scan my checks in without me having to enter anything… and yet all of this is free to me.

    I’m not wealthy – I don’t keep $12k in my checking account at any given point nor am I what they consider a “high value” customer. I have a mortgage, but I have no other debts, and I don’t even have my investment account with the same bank so it isn’t like they are making money from me.

    Why is this so hard for people? I have had a checking account since I was 14 years old and at several different banks over the years yet I don’t believe I have ever paid a single penny in fees. I have had to buy some checks in years past, but I hardly consider that a fee – so if you manage your money and find a good bank… fees shouldn’t be an issue.

    Banking fees are like parking tickets – they are avoidable if you pay attention and use your brain.

    • Bativac says:

      I’ve never paid fees, either, except when I was young and stupid and my account would regularly overdraft. But my credit union has always been pretty good, so the fees weren’t excessive. And there’s no monthly cost for the checking or the savings account. I think they have a minimum balance of $5.

      I think some people just don’t think beyond the megabanks, just like some people prefer Pizza Hut to a local joint or, say, Bud Light to a microbrew. The banks are screwing people with these fees, but the screwee is letting it happen thru their own inaction and lack of looking into other banking options.

      • Costner says:

        That’s the kicker though – I am with a megabank and yet I still pay zero fees. There are so many ways to avoid paying the fees that the vast majority of people can avoid them if they use their heads. I’m not suggesting everyone can avoid all fees, but the vast majority of people can.

        A friend of mine use a much smaller bank and not only does she not pay fees, but if she has at least $500 in direct deposits every month, they send her a $5 ITunes card every month. So basically they are paying her to have a checking account. Pretty sweet deal – and it is much better than places that give free toasters.

  5. highfructosepornsyrup says:

    This must be an American thing…

    No fees on my chequing account here… no min balance. Of course I don’t use it for anything other than holding my money and paying money…

    Also, that Pew link links to a coke story… not a chequing account story.

  6. frank64 says:

    I have always been able to find a bank with no checking fees.

    As for overdrafts costs, yes the banks screw you, but I always look for a bank that has a line of credit attached. They just charge interest of 18%, 18% is high, but if you go over by even $1,000 you pay a few bucks at most for the few days. Some may also charge a per instance fee of $5 or so, but I avoid those. Some banks also charge a per check fee to hit your savings as a back up. That makes no sense, it is a gotcha fee, and I avoid those banks too. The LOC is something you have to look for a bit, but it is something that is not talked about enough.

  7. LightningUsagi says:

    The link goes to the article about the soda/obesity study.

  8. dush says:

    And yet consumers keep patronizing these banks. Maybe Pew should do a yearly study focused on how dumb people are.
    The banks are just earning money like they’ve always been. It’s people that need to change their behavoir.

  9. ap0 says:

    I just moved to a CU from BofA. Although I had a high balance in my accounts and never got any fees, it just sort of feels good to move to a CU. Plus, way better interest rates, both on my checking/savings and a credit card with a rate of 6.9%. Can’t really beat that.