Checking Account Transparency Report: How Easy Is It To Shop For A Checking Account Online?
Checking accounts have become a staple in the average consumer’s financial arsenal, with more than 100 million such accounts in use today, according to the FDIC. Their popularity is unsurprising, given the versatility of this banking version of a Swiss Army knife, which allows consumers to make everyday purchases, directly deposit their earnings, withdraw cash as needed and pay bills online – all with a single account.
But while one might expect a certain amount of uniformity from the market for such a ubiquitous financial instrument – particularly when it comes to account terms and fee disclosures – that’s unfortunately not the case. The opposite actually is true, as consumers face disclosure practices that resemble the Wild West. As a result, the country’s three biggest banks earned more than $6 billion in 2015 from ATM-withdrawal and account-overdraft fees alone, according to SNL Financial.
Given how important straightforward pricing is to sound consumer decision-making, this report sought to evaluate the transparency of the checking account market by analyzing offers advertised on the websites of the 30 biggest banks and 5 largest credit unions. In doing so, we attempted to answer the following three fundamental questions, which are critical to the contemporary consumer banking experience.
- Visibility of Major Fees on Product Page: Are key checking account fees disclosed up front?
- Accessibility of Fee Information: Can consumers easily find fee disclosures on the website?
- Clarity of Fee Information: Once an applicant finds fee information, how easy is it to digest?
Below, you can find the results of this analysis, with takeaways regarding the checking-account market as a whole as well as differences between individual financial institutions and product offers.
- The average checking account has approximately 22 total fees. As was the case in previous years, differing disclosure policies made it hard for us to determine the precise number of fees associated with each checking account, but most institutions fall in the 20 - 40 range, with some reaching nearly 50 total fees. 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 continues to exist across institutions in terms of disclosure formatting, the language used to describe fees and the extent to which different fees are delineated. This significantly inhibits consumer rate-shopping efforts.
Transparency Score By Institution
- Credit unions are more transparent about key account terms than branch-based accounts, but online-only offers provide the most visibility overall.
Transparency Score By Account Type
Tips For Choosing A Checking Account
Checking accounts might seem mundane, but the number of options you have to choose from and their general lack of pricing transparency can make the selection process quite difficult. Keeping the following pointers in mind as you compare your options will help lead you to the best deal.
- 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: While all credit card offers must use uniform fee disclosures such as 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. But not all financial institutions have followed suit, and somehow discrepancies still remain among the final products of the adopters.
- Remember Not All Fees Are Disclosed: Checking-account disclosures generally include 20 to 40 distinct fees. But you won’t always get the full list up front. Some institutions advertise only a small subset of the applicable fees, disclose a few more during the application process and reveal the rest after account opening. So watch out for language like: “A full/complete fee schedule will be provided after sign-up.”
- Evaluate Your Practical Needs: Don’t waste time trying to find a checking account with features you’ll never use or avoid fees you’ll probably never be charged. There is no such thing as the perfect checking account, after all. You’ll have to sacrifice in some respect, and it’s best to give up something you never wanted to begin with. So make a list of your biggest wants from a checking account and focus on finding an account that checks those particular boxes above all else.
- Avoid Unnecessary Bias: Try not to start the search process with the baggage of preconceived notions about the type of financial institution you’ll get your account from, the necessity of in-person banking or the importance of a physical checkbook. Checking accounts from credit unions tend to be cheaper than those from banks, according to our most recent Checking Account Cost Comparison Report, but online-only accounts are the cheapest overall for a fee common use cases. Furthermore, the right prepaid card can be a cost-effective alternative to a traditional checking account in many situations.
- Use Other Accounts, Too: 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 on Product Page
Clarity Of Fee Information
Year-Over-Year Transparency Score
In this study, we analyzed checking accounts from 30 of the largest U.S. consumer-facing banks and 5 of the top credit unions, based on asset volume, using offers listed on the issuers’ websites. Where institutions offered multiple checking accounts, we reviewed the account with the most standard features.
We scored each account on a 30-point scale, allotting 10 points each for the following three categories: Visibility of Major Fees on Product Page, Accessibility of Fee Information and Clarity of Fee Information. Scores were based on the criteria listed below and, in certain cases, our subjective judgment. For example, while some institutions may disclose additional information once a consumer signs up for a checking account, we did not include any disclosure information that was not available to the consumer prior to the application process. We did not review the transparency of account terms and conditions outside of fees.
1. Visibility of Major Fees on Product Page:
Key Question: Are key checking account fees disclosed up front?
Maximum Points: 10
Most people don’t have the time or patience to comb through fee disclosures in an attempt to compare each fee on each account from several institutions. Instead, a more practical approach is to visit a few websites and compare the most common fees — the ones a given consumer is most likely to encounter on a monthly basis — listed on the product pages.
We reviewed the product selection (i.e. the page that usually comes up when you select “Checking Accounts” from the homepage) 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, though institutions 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
In cases where a particular fee is not applicable to the products offered by a given institution, scores were adjusted to reflect this.
2. Accessibility of Fee Information:
Key Question: Can consumers easily find fee disclosures on the website?
Maximum Points: 10
Most financial institutions link to a product’s disclosure from its details page. 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. With that in mind, we used the following criteria to grade this category:
- 5 points = Location of the link to disclosure (comprehensive summary fee disclosure or full disclosure) on the details page
- 5 points = If the link is very prominent at the top of the page or close to the "Apply Now" button
- 3 points = If the link is prominent, but listed on a side bar or the user has to scroll down to find it and is not in close proximity to the “Apply Now” button
- 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 12 pixels or more
- 1 point = If a link to full fee disclosure was provided
- 1 point = If links go directly to the respective disclosure (institutions that require an extra step for location-based disclosures were not penalized)
- 1 point = If the summary is labeled as such, so that consumers know there should also 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 fees, paper statement fees and wire transfer fees. If a portion of this list was found on the product details pages, and the remaining fees were included in the summary disclosure, we considered the disclosure provided to be comprehensive.
3. Clarity of Fee Information:
Key Question: Once you get to the fee information, how easy is it to digest?
Maximum Points: 10
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, unnecessarily long length and general disorganization:
- 2 points = 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 = 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 = Length of the disclosure's fee section
- 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 = 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 excluded fees that we considered to be extraneous to the basic services associated with a checking account. Examples include safety deposit box-related fees; fees for personalized checks/specialty debit cards; legal charges for garnishments, tax levies or child support; and coupon and bond-related fees.
The inconsistency of disclosure policies made it impossible for us to confidently report on the specific number of fees associated with each account. 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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