Free checking? Consumers would settle for fair checking.

April 28, 2011|By Eileen Ambrose

When is too much disclosure become obfuscation?

How about 111 pages.

The Pew Health Group this morning released a study on checking accounts among the top 10 banks. One amazing factoid: The median number of pages of disclosures involving checking account information and fees was 111 pages. That means some banks have even longer disclosures.

Consumers can’t be expected to read 111 pages of disclosures, which makes you wonder if that is the intention.

Among other findings of the Pew study:

—    Customers don’t get full information about overdraft costs.

—    Overdraft penalties are out of proportion to the size of the overdraft. Americans are expected to pay a record $38 billion this year in overdraft fees. The median overdraft is $36. The median penalty is $35.

—    Banks can re-order transactions to maximize overdraft fees. Pew added, though, that since it conducted the study in October, some banks have changed its policy of posting highest transactions first, a method that triggers more overdrafts.

—    More than 80 percent of the 250 accounts examined require binding arbitration to settle disputes or require the customer to pay the bank’s losses and other legal expenses in a dispute, no matter the outcome.

Similar studies along with anecdotal tales of small businesses and consumers unable to get loans from banks, make me wonder if banks don’t realize the harm they are doing — to themselves. At some point, consumers and small businesses will give up on banks and turn to credit unions and some other bank alternatives.


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