A recent study by the Pew Health Group’s Safe Checking in the Electronic Age Project identifies bank practices related to checking accounts that may expose consumers to high costs with little benefit.
For example, the study found that banks often fail to provide consumers with important policies and fee information in a concise and easily understandable format that would allow them to compare account terms among several banks. The median length of disclosures for key checking account information is over 100 pages, and banks often use different names for the same fee or service.
Much of the study focused on banks’ overdraft practices. It found that banks do not provide enough information about the respective cost of overdraft options, and impose penalty fees that are disproportionate to the size of the median overdraft amount. The median overdraft amount is $36, while the median penalty is $35. The study also found that banks’ policies often allow them to reorder transactions in a manner that maximizes overdraft fees.
The research is based on an analysis of more than 250 types of checking accounts offered online by the 10 largest banks in the country.
