A year after detailing potentially harmful practices related to checking accounts, new research by The Pew Charitable Trusts found there have been few moves toward transparency by banks and credit unions.
In releasing an update to its 2010 survey of banks, Pew's Safe Checking in the Electronic Age Project said consumers still are expected to wade through long, confusing documents and may be unaware of the steep fees they face.
The group called on the Consumer Financial Protection Bureau or Congress to codify more protections for checking accounts, making it easier for consumers to comparison-shop by providing easily understood information. Pew also seeks to make overdraft penalties reasonable and proportional to the costs associated with an overdraft.
Pew reiterated its call for more banks to adopt its model checking-account disclosure document. Seven financial institutions, including TD Bank, Chase Bank, Inland Bank and University of Illinois Employees Credit Union, have adopted the form that spells out key information for account holders.
Bank of America and Citibank have committed to introducing the disclosure form in coming months, according to Susan Weinstock, director of Pew's Safe Checking in the Electronic Age Project.
Instead of focusing on only the 10 largest banks, researchers this year collected data from the 12 largest banks and the 12 largest credit unions, as determined by domestic deposit volumes.
The research found that the median length of account disclosures was 69 pages for banks last year and 31 pages for credit unions.
Also, while the median penalty for an overdraft last year stayed at its 2010 level of $35 at banks and $25 at credit unions, the fees charged if the overdraft was not paid within a set period of time rose 32 percent, to $33.
"That's a lot of disclosures for people to read, and we know most don't do that," Weinstock said. "Credit unions tend to be cheaper than banks but the credit union disclosures are not as comprehensive. (The disclosures are) shorter but sometimes we're not sure (whether) they leave things our or they are just not charging a particular fee."
The study also noted that consumers' options remain limited, should they contest something at their bank. The 12 largest banks offer 237 kinds of checking accounts and two-thirds of those accounts require consumers to submit any disputes to binding arbitration.
Nine in 10 American adults have checking accounts, Pew said. Overdraft fees cost consumers an estimated $29.5 billion last year, Pew noted. Chicago Tribune