2013 Checking Account Transparency Report
There are over 100 million checking accounts in the US and close to nine out of ten households have an existing account (FDIC). Checking accounts are among the most basic and critical of financial service tools, allowing consumers to deposit earnings, pay bills, and manage their monthly expenses. That’s why having access to and understanding the costs associated with checking accounts is essential for consumers.
In addition to the monthly checking account fee, checking account customers can now expect to be charged for everything from withdrawing their money to talking with a bank teller to receiving their monthly statement in paper form. In recent years, advocates and regulators have begun to draw attention to the lengthy, small print financial disclosures which can be overwhelming to the consumer and in some cases even misleading. Additionally, the format and the content of the fee information provided on the websites of financial institutions vary widely. All of this can cause confusion and ultimately result in higher fees for the consumer, as evidenced by the industry’s $32 billion in overdraft fee revenue reported by Moebs Services.
In this report we asked, "How transparent are the banks with regard to checking account fee information provided online?” We analyzed checking accounts with an online application component from 25 of the largest US consumer-facing banks, based on total asset volume as reported by the FDIC. In our analysis we asked the following three key questions:
- Are key checking account fees disclosed up front? (Visibility of Major Fees)
- Can the consumer easily find fee disclosures on the website? (Accessibility of Fee Information)
- Once you get to the fee information, how easy is it to digest? (Clarity of Fee Information)
We scored each bank on a 30-point scale (allotting 10 points each for Visibility of Major Fees, Accessibility of Fee Information and Clarity of Fee Information).
- There are approximately 30 total fees associated with the average checking account. The variance in disclosure policies made it impossible for us to determine the precise number of fees associated with each checking account but most banks fell in 20-40 total fee range, with some exceeding 50. The sheer number of different fees associated with checking accounts prevents effective product comparison and decreases the likelihood that a consumer will find the best checking account for their needs.
- A general lack of uniformity across institutions in terms of checking account fee disclosure form, format and content makes it difficult for consumers to compare and shop for a checking account
- 20% of banks (5 out of 25) did not provide a list of fees to the consumer on the checking account product pages of their websites prior to the consumer submitting an online checking account application. These banks – which include HSBC Bank, Huntington National Bank, USAA Federal Savings Bank, Sovereign Bank, and M&T Bank – received the lowest overall scores given that the absence of an easily accessible fee schedule creates a true inability for the consumer to shop for the best account.
- Best Overall. Capital One and Fifth Third Bank both received a perfect score of 100%. They were the only two banks that either revealed or did not charge all five of the key fees up front. They also scored a perfect 10 for accessibility of fee information and clarity of fee information. Citibank came in close behind at 97%.
- Worst Overall. M&T Bank received the lowest score at 16.7%. The only fee information that was available from the M&T website concerned the monthly fee and the overdraft fee. No fee schedules were available anywhere on the M&T product website, making it impossible for a consumer to compare their costs against those of other banks.
- Visibility of Major Fees:
- Best: Capital One and Fifth Third Bank were the only banks that revealed or did not charge all five of the key fees up front, giving them the only perfect score in this category. Citibank, Key Bank and USAA Federal Savings Bank also scored high (9) on this measure.
- Worst: Comerica scored the lowest on this measure (4) since they only listed the monthly fee and the paper statement fee up front.
- 28% of banks scored 5 or below on the Visibility of Major Fees score.
- Accessibility of Fee Information:
- Best: Nearly half (48%) of the banks scored a perfect 10 on this measure with well-labeled direct links from the checking account product pages to summary and full disclosure or full disclosure fee information.
- Worst: The five banks that did not provide a link to fee schedules from their checking account product pages – HSBC Bank, Huntington National Bank, USAA Federal Savings Bank, Sovereign Bank, and M&T Bank – registered a zero on this measure.
- Clarity of Fee Information:
- Best: The banks with a clear, short (<5 pages), well-organized and easy-to-read single-product disclosure received a perfect 10 on this measure. They are Capital One, Fifth Third Bank, Citibank, Union Bank, TD Bank, JPMorgan Chase, HSBC Bank, and RBS Citizens Bank.
- Worst: M&T scored a zero on this measure since it did not provide a schedule of fees to consumers anywhere on its web site.
*Notes from banks on upcoming changes to disclosure policy:
Sovereign Bank: “… on August 1, Pew Charitable Trusts will issue a press release praising our soon to be launched “Simple Facts” piece which has a very comprehensive and easy to understand explanation of our fees. This overview will be up on our website soon (still working on final logistical details) so you will be able to see it at this link once it’s been finalized: www.sovereignbank.com/simplefacts. In addition, customers will be able to easily access the fee information from each relevant individual product page.”
Compass Bank: “We are launching 4 new checking accounts on 9/30/13. With this launch, we are including a more simplified easy to read product disclosure and a product summary at the beginning of the disclosure that highlights the most important product pricing, fees and features.”
Transparency Results Table
|Bank||Overall score||Total Points (30 points total)||Visibility of Major Fees Score (out of 10 possible pts)||Accessibility Score (out of 10 possible pts)||Clarity Score (out of 10 possible pts)|
|Fifth Third Bank||100.0%||30||10||10||10|
|Bank of America||91.7%||27.5||8.5||10||9|
|JPMorgan Chase Bank||91.7%||27.5||7.5||10||10|
|Branch Banking and Trust Company||88.3%||26.5||7.5||10||9|
|BMO Harris Bank||83.3%||25||8||8||9|
|Wells Fargo Bank||83.3%||25||7.5||9||8.5|
|First Republic Bank||78.3%||23.5||6||8||9.5|
|Bank of the West||70.0%||21||5||8||8|
|USAA Federal Savings Bank||53.3%||16||9||0||7|
|The Huntington National Bank||45.0%||13.5||5||0||8.5|
The biggest issue that consumers encounter when shopping for checking accounts is the lack of uniformity in fee disclosure policies. A few different factors contribute to this critical disparity.
First, we found very different information provided about the most common fees listed up-front on the checking account product pages of the banks’ websites. Some disclose up to eight or nine fees and features associated with an account, while others only list two or three. Consumers who do not take the extra step to read through the fee schedules can therefore be easily misled by looking only at the fees listed up front.
Second, we found wide variation in the format of the fee disclosures. While some banks listed the fees associated with all of their checking and savings accounts together on the same disclosure, others provided one disclosure per product. Still others provided a short summary disclosure based on a model form designed and championed by the Pew Foundation that covered the most common fees associated with the account, along with a longer full fee disclosure that included all of the fees.
This Pew summary disclosure form has been adopted by many of the large banks and represents significant improvement over the lengthy disclosures of the past. Nevertheless, it has not garnered industry-wide adoption, and even those banks that have adopted the new form face challenges. While almost all of the summary forms included information about monthly fees, ATM fees, and overdraft-related fees, there was wide variation in terms of which “other” fees, such as wire transfers and account closure fees, were disclosed. All things considered, the Pew disclosure template is helpful to the extent that consumers can compare the most common fees associated with checking accounts. However, the inconsistency of the less common fees may lead consumers to incorrect assumptions about whether certain fees do or do not apply to specific accounts.
In addition, some banks only disclosed their fees (and not necessarily all of them) after the consumer signed up for an account. Others disclosed fees in difficult–to-find sections of their websites. ’What's more, even when banks did disclose fees up front, there were discrepancies in which fees were initially disclosed , which were disclosed at the time of application and which were disclosed after the consumer signed up for the account. The inability to easily access and review fee information before applying for an account presents a significant barrier for the consumer to accurately compare products across institutions.
At the outset of this analysis, we tried to gather the total number of fees associated with each checking account. Unfortunately, the variations listed above made it impossible for us to count the fees for each account since we were never sure if Bank A had more fees listed than Bank B or whether Bank A was simply disclosing more fees up front. We were ultimately able to determine that the total number of fees generally ranged between 20 and 40, allowing us to conclude that the sheer number of fees associated with most checking accounts can make it difficult for consumers to compare, shop, and generally manage the costs of their accounts.
Finally, in our discussions with bank personnel, we were repeatedly told that many of the fees listed on their fee schedules were rarely assessed, implying that they were so uncommon as to be inconsequential to our analysis. But if fees are rarely assessed, why then complicate the information presented to the consumer? In some cases, it was difficult to even determine what services were associated with fees such as international service assessment fee or domestic collection fee based on their naming conventions. Some bank staff members even reported having to look up the definition of a few of the fees themselves. If bank personnel are unsure about the definition of a fee, how is the consumer expected to understand what it means and whether they are likely to incur the fee?
Bottom line: Until regulators demand a greater degree of consistency in the content, form and format of fee disclosures, consumers will need to stay on their toes when it comes to shopping for a checking account.
In this study we analyzed checking accounts with an online application component for 25 of the largest US consumer-facing banks with a retail presence based on total asset volume as reported by the FDIC. Banks without physical branches (online only) were excluded from the study. Where institutions offered multiple checking accounts, we reviewed the account with the most basic features excluding those accounts that were online only (provided no physical branch services). We gathered the basic information for our report from the websites of each of the 25 institutions, and confirmed the information with each institution with the exception of BB&T and M&T Bank. Despite multiple attempts to garner verification, these banks did not respond, and the respective information, gleaned from the website and through their customer service lines, could not be definitively confirmed. Scoring of each institution was based on the methodology below and in some cases involved our subjective judgments.
We scored each of the 25 banks on a 30 point scale allotting 10 points each for Visibility of Major Fees, Accessibility of Fee Information and Clarity of Fee Information. Our assessment of checking account disclosures is limited to fee information only. We did not review the transparency of account terms and conditions outside of fees. Additionally, although some institutions may disclose additional information once a consumer signs up for a checking account, for the purposes of our analysis, we did not include any disclosure information that was not available to the consumer prior to the application process.
Visibility of Major Fees: Are key checking account fees disclosed up front?
Most people don’t have the time or patience to comb through fee disclosures to try and compare each fee from several banks. Instead, a more practical approach is to go to a few websites and compare the most common fees – the ones they are most likely to encounter on a monthly basis.
We reviewed the checking account product summary and landing Web pages associated with each checking account to discern whether or not consumers have access to five primary fees, including the monthly maintenance fee, ATM fees (in-network and out-of-network,) overdraft fees, paper statement fees and online bill pay fees. Points were subtracted for key fees that were charged, but not disclosed up front. Banks were given full credit if there was no charge associated with that fee. We applied half credit for any key fee listed on a clearly organized 1-5 page summary of fees document, linked from the summary or landing page. For example, if the overdraft fee was not listed on the landing or summary page but was listed on a clearly marked 2-page summary of fees document, 1 point was applied.
The Visibility of Major Fees was scored on a 10-point scale. Points were given for each major fee disclosed as follows:
(3) = Monthly Fee disclosed up front or free
(3) = ATM Fees disclosed up front or free
(2) = Overdraft Fees disclosed up front or free
(1) = Online Bill Pay disclosed up front or free
(1) = Paper Statement disclosed up front or free
Accessibility of Fee Information: Can the consumer easily find fee disclosures on the website?
We found four distinct format categories for checking account fees disclosures: 1) One full disclosure focusing on a single product 2) One full disclosure for multiple checking and savings accounts 3) One summary disclosure, and one full disclosure 4) No summary or full disclosure, only a limited list of a few fees on site. (In this case you would need to apply for an account to receive the fee disclosure.) Most of the banks had links to disclosures. In some cases, those links were bold and in the middle of the page. In others, the links were in small print and more difficult for the consumer to find.
The Accessibility of Fees category was scored on a 10-point scale using the following criteria:
(9-10) = All fees listed on a single disclosure or a single product summary of fees document, clearly described as such and a full disclosure. Both are available and easily seen on checking account summary or landing pages or linked from summary of fees to full disclosure.
(7-8) = All fees for multiple products listed on a single disclosure or summary of fees clearly described as such and full disclosure available either on checking account summary or landing page. Links marked but are less visible and easier for consumer to miss (smaller print, listed at very bottom of page or on left or right of page – separate from product description).
(5-6) = No link to full disclosure but links to summary of fees on summary or landing page.
(0) = No link to fee disclosures on checking account summary or landing pages
Clarity of Fee Information: Once you get to the fee information, how easy is it to digest?
We analyzed the “readability” of the fee disclosures. Points were subtracted for including multiple account types on one disclosure, small print, the length of the disclosure, as well as the general organization of the document. In general banks fell into one of the following scoring parameters:
(9-10) = One disclosure with large print, well organized, single product, ≤ 5 pages OR one summary disclosure with large print, well organized, single product, ≤ 5 pages and one well organized full disclosure
(7-8) = One small-print disclosure with multiple products, ≥ 8 pages, OR one summary disclosure with large print, well organized, single product, ≤ 5 pages and one 10+ page small print, not well organized full disclosure
(5-6) = No summary, one full disclosure with multiple products, small print, 20+ pages, not well organized or one clear summary <5 pages but no full disclosure
(0) = No fee disclosure provided anywhere on website
Total Number of Fees: In calculating the total number of fees, we did not include those fees that we considered to be extraneous to the basic services associated with a checking account. Fees excluded from the count include safety deposit box-related fees, personalized checks/specialty debit cards, gift cards, legal charges for garnishments, tax levy or child support, and coupon and bond-related fees.
The inconsistency in disclosure policy made it impossible for us to confidently report on the specific number of fees associated with each account, since we were never certain if Bank A had more fees listed than Bank B or whether Bank A was simply disclosing more fees up front. As a result, we chose to report only the approximate average number of fees associated with a checking account.