Bucks Blog: Banks Lag on Consumer-Friendly Checking Practices

Two of the country’s largest banks scored well on a ranking of the consumer-friendliness of their checking accounts, but no bank met all of the recommended criteria, a new analysis found.

The report, from the Pew Charitable Trusts’ Safe Checking in the Electronic Age project, assessed 36 of the country’s largest 50 banks, ranked by deposits, on their policies for clear disclosure of terms and fees; overdrafts; and dispute resolution. (Fourteen of the country’s 50 largest banks were not included because they didn’t offer a way for consumers to learn about their policies without visiting a bank branch).

Pew defines “best” practices as those that are most effective in giving account holders clear, concise information about costs and terms; reducing the number of overdrafts, and eliminating practices — like transaction re-ordering – -that maximize overdraft fees; and providing a meaningful alternative to mandatory binding arbitration for consumers to solve problems with their bank.

The report identified seven “best” practices and 11 “good” practices. For instance, Pew’s “best” practice for disclosures is the adoption of a simple “summary box” or a page that lays out the basic terms and fees associated with the account in simple language. Eight banks meet this criteria, Pew found. (Pew has worked with banks to help them design the simplified disclosures).

The top-ranked bank overall was Ally Bank, an online-only bank that met six of the seven “best” practices identified by Pew, and nine of 11 “good” practices.”

Two of the biggest banks, Citibank and Bank of America, ranked in the top five over all, with five “best” practices each.

The bottom 10 banks on the list had no more than one “best” practice. They included SunTrust, U.S. Bank and KeyBank.

However, all banks can do better, said Susan Weinstock, director of the safe-checking project. “All banks showed there is room for improvement,” she said.

Ms. Weinstock also noted that while some banks have taken steps to provide clearer disclosures and adopt more customer-friendly practices, they generally are doing so voluntarily and can change their policies at any time. For that reason, Pew is urging the Consumer Financial Protection Bureau to require banks to provide clear disclosures and to follow fair overdraft policies.

The bureau is reviewing bank overdraft practices, she said, and “We’re hopeful they’ll take action soon.”

A full list of the relative rankings can be found on the safe checking Web site.

Do you think Pew’s criteria make sense? How does your bank rate?

Article source: http://bucks.blogs.nytimes.com/2013/06/04/banks-lag-on-consumer-friendly-checking-practices/?partner=rss&emc=rss