Many consumers are unaware of new fees and disclosures…
Looking to recoup losses due to federal regulations, more banks are revisiting the idea of adding fees and penalties to checking accounts. Nine out of ten Americans could be affected, with many under the false impression that the terms of their checking account cannot be changed. In the past year, banks have hiked monthly fees, imposed tougher minimum balance requirements and even taken away rewards programs. As a result, people may be shocked to realize how much their account is costing them.
A recent study by the Pew Charitable Trusts confirms a lack of transparency related to checking accounts. The “Hidden Risks: The Case for Safe and Transparent Checking Accounts” shows that consumers may not understand the terms of their accounts and are paying for unnecessary overdraft fees and penalties. Their analysis of 265 accounts from ten major banks found that the disclosure statement of the average checking account is 111 pages long. In addition, the average consumers pays a monthly fee of $8.95. Also among the findings are average checking account fees: overdraft penalty fee of $35, overdraft transfer fee of $10 and an extended overdraft penalty fee of $25 every seventh day the account is overdrawn.
After exposing the vulnerability of consumers, Pew made several policy recommendations that would protect checking account holders in the same way that credit card users have been protected from unreasonable fees and penalties. Banks should be required to have a single page disclosure document for their checking account customers that would include ATM fees, account minimums, closing fees, overdraft and other penalties and the order in which withdrawals and deposits are posted to the account.
Until then, it’s your responsibilty to be aware of changes to your checking account. If you haven’t read your account disclosures, it may be worth requesting them from your bank and reading over them thoroughly. Contact your bank manager and ask about recent changes and always monitor your checking account statement.
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