Checking Account Transparency Report: How Easily Can Consumers Shop for a Checking Account Online?
Checking accounts have become a staple of the average consumer’s financial arsenal. Today, more than 100 million checking accounts are active in the United States, according to the FDIC. That’s unsurprising, given the versatility of such a product that allows consumers to make everyday purchases, deposit their earnings, pay their bills and manage their finances online with one account.
For such a ubiquitous financial product, one would expect consistency in disclosures and fee standardization. Unfortunately, the opposite is true. Consumers face disclosure practices that resemble the Wild West. And the proof is in the pudding: In 2013, Moebs Services reported that the industry earned $31.8 billion in overdraft-fee revenue. In a recent Pew Charitable Trusts survey regarding overdraft fees, 80 percent of overdrafters agreed that charges and practices need stricter regulations.
The central goal of this report is to measure transparency with regard to checking account fee information that banks provide online. We analyzed checking accounts with an online application component from 25 of the largest U.S. consumer-facing banks, based on total asset volume as reported by the FDIC. In our analysis, we asked the following key questions:
- Are key checking account fees disclosed up front? (Visibility of Major Fees on Product Page)
- 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 account on a 30-point scale, allotting 10 points each for Visibility of Major Fees on Product Pages, Accessibility of Fee Information and Clarity of Fee Information. As we improved our methodology this year, we did not compare our current findings with the results of our 2013 report.
- Similar to the previous year, there are approximately 30 total fees associated with the average checking account. Once again, the variance in disclosure policies made it hard for us to determine the precise number of fees associated with each checking account, but most banks fell in the 20 to 40 total fee range, with some reaching almost 50. The sheer number of different fees associated with checking accounts prevents effective product comparison and decreases the likelihood that consumers will find the best checking accounts for their needs.
- A general lack of uniformity across institutions in terms of checking account fee disclosure form, format and content continues to be present, which makes it difficult for consumers to compare and shop for a checking account.
- There are still two banks out of 25 surveyed in 2014, namely USAA and M&T Bank, that do not provide a fee schedule to consumers on the checking account product pages of their websites.
- The highest-scoring bank was Capital One, which received 90%.
- The lowest-scoring bank was M&T Bank, which received 26.67%. The only fee information that was available from the M&T website concerned the monthly fee, ATM fees 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. However, M&T announced some major changes to their website.
Overall Transparency Score
- Read the fee schedule thoroughly: The number of checking account fees that banks disclose on their product pages varies greatly from one bank to another. Absence of a fee from the product page does not necessarily mean the fee is $0. Consumers should always review the fee schedule before opening an account to avoid any surprises in the future.
- Don’t expect consistency in format: Unlike credit card offers that all have to use uniform disclosures of fees like the Schumer Box, there is nothing similar for checking accounts. In recent years, many large banks have adopted a summary disclosure form designed by the Pew Research Center to make fee disclosure practices more uniform and straightforward. However, not all have adopted it. And of the ones who have, there are discrepancies among their disclosures. Unfortunately, checking account disclosure practices resemble the Wild West.
- Evaluate your practical needs:As evidenced by the number of fees that checking accounts charge, they offer a plethora of services ranging from straightforward ATM withdrawals to international wire transfers. You must therefore consider what exactly you’ll need from your checking account in practical terms. For instance, how much money will you hold in your account at any given time? Do you need a debit card, a physical checkbook, or an accessible local branch? How many ATM withdrawals will you make each month? The answers to such questions will eliminate certain checking account offers from contention and will dictate which fees you should focus on minimizing.
- Fewer disclosed fees doesn't mean fewer actual fees: The number of fees listed by banks in disclosures varies from 20 to 40. Some banks disclose their fees only after a customer has opened an account. Others disclose their fees in inconspicuous sections of their websites. Consumers should be aware that there are banks that disclose only a part of their full list of fees initially, another part during the application process and the rest after the consumer has signed up for the account. Also watch out for language like “A full/complete fee schedule will be provided after sign-up.”
- Cast a wide net: When you begin your search for a new checking account, start broad and refine as you go. That means you should avoid entering the search process with any preconceived notions, such as the particular institution you’ll get your account from, how large of a bank you wish to do business with, the necessity of in-person banking, etc.
- Supplement with other accounts: A checking account will enable you to receive direct deposit of your monthly checking account, automatically pay monthly bills, and benefit from ad hoc access to cash. You can’t use a checking account for everything, though. You might therefore want to strategically supplement your checking account with an attractive savings account and/or credit card offer in order to make your financial management as efficient and rewarding as possible.
- Visibility of Major Fees:
- Best: Capital One and Santander Bank were the only two banks to receive the highest score (9) in this category.
- Worst: TD Bank, PNC, RBS Citizens, Comerica and Key Bank scored the lowest on this measure (6), as they listed only the monthly fee and the online bill pay fee up front.
- Average score across banks: 7.02
Visibility of Major Fees on Product Page
- Accessibility of Fee Information:
- Best: More than half (52%) of the banks scored a perfect 10 on this measure with well-labeled direct links from the checking account product pages to the fee disclosure.
- Worst: The two banks — USAA Federal Savings Bank and M&T Bank — that did not provide a link to fee schedules from their checking account product pages registered a zero on this measure.
- Average score across banks: 8.28
- • Clarity of Fee Information:
- Best: The banks that provide clear, short (less than three pages), well-organized and easy-to-read single-product disclosures received a perfect 10 on this measure. They include TD Bank, JPMorgan Chase, Wells Fargo, Bank of America, The Huntington National Bank, BB&T Bank, PNC Bank, U.S. Bank, Sun Trust Bank and RBS Citizens Bank.
- Worst: Same as the previous year, M&T scored a zero on this measure since it did not provide a schedule of fees to consumers anywhere on its website.
- Average score across banks: 8.22
Transparency Results Table
|Overall score||Visibility of Major Fees on Product Page||Accessibility Score||Clarity Score|
|Max 100%||Max 10 points||Max 10 points||Max 10 points|
|JPMorgan Chase Bank||88.3%||6.5||10.0||10.0|
|Wells Fargo Bank||88.3%||6.5||10.0||10.0|
|Bank of America||88.3%||6.5||10.0||10.0|
|The Huntington National Bank||88.3%||6.5||10.0||10.0|
|BMO Harris Bank||85.0%||8.0||10.0||7.5|
|Fifth Third Bank||85.0%||6.5||10.0||9.0|
|First Republic Bank||75.0%||8.0||8.0||6.5|
|Bank of the West||65.0%||6.5||10.0||3.0|
|USAA Federal Savings Bank||46.7%||8.0||0.0||6.0|
*Starting with the 28th of August M&T will be making changes to its product pages and will include a fee schedule on their site, as such, past the 28th our scoring will no longer be entirely accurate for M&T.
UPDATE 10/30/2014: As a result of this study, Citizens Bank modified its “One Deposit” product page to list the cost of a check book. Other institutions have welcomed our feedback and expressed the intention to make consumer-friendly modifications to their product pages.
UPDATE 11/20/2014: Similar to Citizens Bank, USAA has modified its product pages and disclosures and improved their score significantly.
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Note: The methodology used for the current study is different from the 2013 methodology and therefore direct comparisons between the scores should not be made.
In this study, we analyzed checking accounts (as of Aug. 11, 2014) with an online application component for 25 of the largest U.S. 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 or 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 Santander Bank. Despite multiple attempts to obtain verification, this bank did not respond. 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 and allotted 10 points each for Visibility of Major Fees on Product Page, 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, though 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 on Product Page: Are key checking account fees disclosed up front? – 10 points maximum.
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 visit a few websites and compare the most common fees — the ones they are most likely to encounter on a monthly basis — listed on the product pages.
We reviewed the product selection and product details pages associated with each checking account to determine whether consumers have access to five key fees prior to clicking the “Apply Now” button (info disclosed in a different tab was given full credit as long as the tab was very prevalent at the top of the page). 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 to 5 summary disclosure page or in a footnote, with the exception of the fee for ordering checks, which received full credit. For example, if the overdraft fee was not listed on the landing or summary page but was listed on a clearly marked two-page summary of fees document, one point was awarded.
- 2 points = Monthly fee disclosed up front or free
- 3 points = ATM fees (in-network, out-of-network and international) disclosed up front or free
- 2 points = Overdraft fees disclosed up front or free
- 1 point = Online bill pay disclosed up front or free
- 1 point = Paper statement disclosed up front or free
- 1 point = Fee for ordering checks disclosed up front, or in summary disclosure page, or free
Accessibility of Fee Information: Can the consumer easily find fee disclosures on the website? – 10 points maximum.
Most banks link to their disclosure pages from the product details pages. In some cases, those links were bolded and located at the middle of the page. In others, the links were in small print and more difficult for consumers to find.
The Accessibility of Fees category was scored on a 10-point scale using the following criteria:
- 5 points = Based on the location of the link, within the product details page, pointing to either the comprehensive summary fee disclosure or full disclosure
- 5 points = If the link is very prominent
- 3 points = If the link is listed on the side bar to the left or to the right of the page
- 1 point = If the link is listed in the footnotes of the page
- 0 points = If the link is not provided on both the product selection page and product page
- 2 points = If the font size of the link is normal (if less than 12 pixels, the font was considered small)
- 1 point = If a link to full fee disclosure was provided (applies only when a comprehensive summary was used for scoring)
- 1 point = If links go directly to the respective disclosure (i.e. no subsequent clicks required)
- 1 point = If the summary is labeled as such, in order for consumers to be aware that there also should be a full disclosure (applies only when summary is used for scoring)
A summary of fees page was considered to be comprehensive if it included the following fees: monthly fee, all ATM charges (i.e. in-network, out-of-network and international), overdraft charges (insufficient funds and extended overdraft included), online bill pay, paper statement and wire transfer fees. If a portion of these fees was found on the product details pages, and the remaining fees were included as part of the summary disclosure, we considered the disclosure provided to be comprehensive.
Clarity of Fee Information: Once you get to the fee information, how easy is it to digest? – 10 points maximum.
We analyzed the “readability” of the fee disclosures (either within the full disclosure or within a comprehensive summary, when available). 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
- 2 points = Based on the number of accounts listed in the fee disclosure
- 2 points = If the disclosure listed fees for only one account
- 0.5 points = If the document listed more than one account
- 0 points = If the document could not be located
- 2 points = Based on font size of the fee disclosure
- 2 points = If information in the disclosure is listed in normal size print (if less than 12 pixels, the font was considered small)
- 0.5 points = If font used was small
- 0 points = If the document could not be located
- 3 points = Based on the length of the fee section in the disclosure
- 3 points = If disclosure is up to 3 pages long
- 2 points = If disclosure is 4 pages long
- 1 point = If disclosure is 5 pages long
- 0.5 points = If disclosure is more than 5 pages long
- 0 points = If disclosure is missing
- 3 points = Based on the general organization of the document
- 3 points = If disclosure is very well organized (i.e. similar to the design proposed by Pew)
- 1.5 points = If disclosure has average organization
- 0.5 points = If disclosure is poorly organized
- 0 points = If disclosure is missing
Total Number of Fees : In calculating the total number of fees, we did not include 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 policies made it impossible for us to confidently report on the specific number of fees associated with each account, as 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.
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