Checking account facts all consumers need to be aware of

Consumer relationships with big banks are suddenly changing and not for the better from what they were weeks ago. A study conducted by Pew Group on Safe Checking account practices found that consumers have very little time to develop relationships with banks while considering checking accounts. Most of the time everything is in favour of the bank rather than the consumer and this makes things very complicated.

After a study conducted on top 10 banks in the nation, the group arrived at the conclusion that on an average, disclosures on checking accounts ran up to 111 pages. In addition they were full of conditions that were quite unfriendly to consumers.

The lack of clear and concise information from the banks about the accounts is creating many problems and risky situations to the consumers each time.

Pew said that with 10 largest online banks and 250 different checking accounts that were examined a lot of information came to light:

Consumers do not get the whole information about what the costs of overdrafts will be and what options are available, banks are not bound to disclose these details.

Banks also have the right to process transactions in any order they please and this allows them to get the most in overdraft revenue. Quite an unfair thing and costs a lot to consumers.

Eight out of ten checking accounts lock consumers into absorbing the banks costs in disputes through arbitrations which are most of the time, binding.

Pew also found that banks are making more profits in overdraft fees by increasing charges to more than 38.5 billion in 2011 which is over 18.6 billion from the past years. When considering an overdraft to be a short term loan which is payable in a week, the APR rate would be greater than 5000 percent which is an interest charge that makes a loan shark look like a saint.

Consumers should be given access to account terms and fees which is not the case and banks are not complying with these specifications and laws. Most of the time, the information provided is pretty vague making it either unclear or unduly long to make sure consumers don’t understand what is the real deal. Law makers have to ensure that consumers can find transparency when it comes to checking accounts and find them to be safer and easier to use. This will help to make sure that overdraft fees remain proportional and reasonable.