Study Shows Consumers Need Clearer Disclosures on Bank Fees

May 14, 2015, Written By Justin Hefner
financial concept - writing a check. the account numbers on the check are not real.
** Note: Shallow depth of field

For the third year in a row, Pew Charitable Trusts conducted a study analyzing the disclosure, dispute resolution and overdraft policies for 45 of the top 50 largest retail banks in America. The 2015 Checks and Balances report shows banks are making strides to improve their checking account practices, but there is still room for improvement.

According to the study, 62% of banks have adopted a summary box that meets Pew’s consumer-driven standards, up from 25% in 2013. 84% of the 32 banks that have been in the study all three years have a clear disclosure statement for their default overdraft options. Consumers are made aware of how their overdrafts will be treated at both the register and the ATM, and they must choose to opt-in for overdrafting in order for the transactions to take place.

Despite the increase in the amount of overdraft disclosures, many consumers still encounter fees because they do not remember opting-in for overdraft coverage. The study recommends that banks decline all ATM and debit card transactions that would overdraw a person’s account. Currently, only 22% of the 32 banks surveyed do this.

Another problem revealed in the study is the process of reordering, where a bank will order transactions from largest to smallest when charging a person’s account. If the largest transaction withdraws all the funds from a person’s account, any subsequent smaller transactions that occur may be subject to a fee. Pew saw an improvement in this process over the three-year period, with only 44% of banks practicing reordering. That is down from 59% in 2013.

“The practice of reordering from high to low should be prohibited,” Susan Weinstock, the director of the study, told CBS MoneyWatch. “There are still a lot of banks that are using that method to maximize overdraft fees. We can’t wait around for every bank to say they’ll give up that practice.”

The information contained within this article was accurate as of May 14, 2015. For up-to-date
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