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Some Banks, Credit Unions Have Made It Easier To Compare Checking Accounts

Pew Charitable Trusts has prodded banks to simplify account disclosures.Prodded by an advocacy group, some of the nation’s largest banks have made it easier to comparison-shop for checking accounts.

At the urging of Pew Charitable Trusts, big banks like Chase and Bank of America, as well as a handful of smaller banks and credit unions, have streamlined their checking account disclosures — which once filled dozens of pages — and boiled them down to just a page or two.

This should make it easier to quickly learn what features the account has, and more importantly, how much you’ll be charged to hold the account.

Pew’s example of a disclosure box makes it extremely easy to tell, for example, how much you’ll pay in monthly fees and what requirements you’ll have to meet to avoid those fees. Also spelled out: how much you’ll pay to use an out-of-network ATM and what you’ll be charged if you overdraw your account.

With the complicated forms, “it was very difficult to shop for a checking account,” says Susan Weinstock, director of Pew’s Safe Checking in the Electronic Age Project. By making that information easier to decipher, “consumers can make choices that best meet their needs.”

The project began in October 2010, when Pew began gathering information on the checking account disclosures of 10 big banks. It found the median length was a daunting 111 pages. (An update this summer found the length had decreased to a “still cumbersome” 69 pages.)

Drawing on the model adopted by Congress for credit card solicitations, which spells out specific terms and conditions such as annual fees and interest rates, Pew staff members drew up their own simplified form, focusing on the most common checking account terms and conditions. They then ran focus groups to gauge consumers’ response.

Pew began urging banks and credit unions to adopt simplified forms. So far, 14 have done so. Each institution has slightly different forms, Weinstock says.

The organization also is calling on the Consumer Financial Protection Bureau to enact such a requirement for all banks and credit unions.

Last month, Bank of America became the latest big bank to revise its forms.

“Our customers want clear and easily accessible information about their accounts so they can make the choices that are right for them,” consumer and small business products executive Susan Faulkner said in a release. “We listened to customers and made enhancements that help make it easier for them to understand and control their finances.”

The “Clarity Statement” for Bank of America’s MyAccess Checking Account, for example, spells out things like the monthly maintenance fee and how it can be avoided, ATM fees, overdraft policies and fees, and fees for other services, in a simple, two-page document.

Other big banks that have adopted similar forms are Capital One, Citibank, Fifth Third Bank and TD Bank. In fact, Wells Fargo is the only member of the big four that hasn’t adopted the Pew form.

Several smaller banks also have the simplified statements: Cape Cod Five Cents Savings Bank of Harwich Port, Mass.; Inland Bank of Oakbrook, Ill.; Town and Country Bank of Springfield, Ill.; and Webster Bank of Waterbury, Conn.

Among credit unions, three of the biggest — Pentagon Federal in Alexandria, Va., North Carolina State Employees’ in Raleigh, N.C., and Eastman in Kingsport, Tenn. — have adopted new forms, as has University of Illinois Employees Credit Union in Champaign.

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  1. creditunion said:
    on September 11th at 02:42 pm

    This is great for the both the bank and the consumer. The benefit for consumers is obvious, but for banks, think about how much time the bank employees have spent discussing and arguing with consumers about why the fees are there, or where the fees came from and why the have to pay them. Simplifying the comparison process should eliminate most, if not all, of these discussions and free up the bankers to do what they do.