Bank Terms Fuzzy, Difficult To Find For Consumers

Bank Terms Fuzzy, Difficult To Find For Consumers

When it comes to checking account disclosures, major American banks tend to be closer to a calculus text than a children’s book.

As customers are beginning to demand more clarity from banks in the face of new fees and changing requirements, outside studies found banks have fee or checking account disclosures that are long, difficult to understand and sometimes non-existent. A study conducted earlier this year by the Pew Charitable Trusts Safe Checking in the Electronic Age Project found that at the 10 largest American banks, the median checking account disclosure was 111 pages long. And that is not all–Pew also found the terms in these disclosures heavily favored the banks over consumer interests, and because they were presented in an unclear way these conditions left consumers vulnerable to fees and penalties.

After studying more than 250 online checking accounts at the same banks it surveyed before, Pew found that information about overdraft cost was often missing, and that nothing requires a bank to disclose these fees. Banks are also able to play with the order of transactions, placing large charges ahead of deposits so they could maximize overdraft fees. Many customers had checking account policies that locked them into binding mandatory arbitration, so even if they won a dispute banks could still force them to absorb costs. A study conducted by USA Today returned similar results, finding that many of the largest banks made it difficult to find withdrawal or out-of-network ATM fees.

Fueled in part by the anti-bank sentiment coming from the Occupy Wall Street movement, there has been a national backlash against the fees and confusing practices banks have used against customers. In September Bank of America and a handful of other major banks announced plans for a $5 monthly fee for debit card customers, though most banks went back on this plan amid heavy criticism. Since September a record 650,000 customers have left larger banks to join credit unions, the Credit Union National Association found, and a Harris Interactive Survey found that 9 percent of Bank of America Customers said they plan to leave the bank. This anger also has a basis in the fees banks have garnered from their customers–Pew found that in 2011 banks brought in $38.5 billion in overdraft fees, up from $18.6 billion in 2000.

Now, Pew has lent its voice to a movement to make these banks simplify disclosures. The non-profit suggested that banks be required to give customers checking account terms in a simple and understandable format, similar to the box credit card companies use to disclose terms and interest rates. Pew’s suggestion has been backed by the Consumer Financial Protection Bureau, which called on banks to make their terms and fees more clear. As these organizations call on banks to make their disclosures easier to understand, some organizations are working to bring the information directly to consumers. Sites like Bank-Account.com allow customers to browse different banks, comparing interest rates, fees and perks on checking accounts.