Banks for You!

In reality, consumer relationships with the major banks are actually much worse than what it may have seemed like a few weeks ago.

Pew Health Group has just finished a study known as Pew Health Group’s Safe Checking in the Electronic Age Project, which details just how consumers have very little or no chance to comprehend the terms and conditions with regard to their checking accounts as these are heavily in favor of the banks.

The Pew group included 10 of the largest banks as part of its study to look into the disclosures that banks made on their checking accounts. The study found that these checking account disclosures ran into 111 pages and also included a host of conditions that were not consumer friendly at all.

The group stated that the failure to provide a clear and crisp disclosure could potentially expose the checking account holders to a lot of risks that could be very dangerous.

There were more than 250 different types of checking accounts that were offered online by these 10 major banks that were part of the study. Some of the findings were as follows:

• Consumers were never given a full disclosure regarding the costs involved with overdrafts or other options that are there as banks need not disclose them.
• The order in which transactions are processed may be changed by the banks and this helps in giving banks more opportunities to charge overdraft fees.
• At least 8 out of 10 checking accounts bind consumers into mandatory arbitration where the consumers would be required to absorb the legal costs irrespective of who wins the dispute.

The study conducted by Pew also reviewed the way in which banks had stepped up to push their profits by charging overdraft fees, and had increased their charges to $38.5 billion during 2011 which is up by $18.6 billion since the year 2000. The fees charged on these overdrafts were disproportionate to the actual overdraft stated Pew. The overdraft penalty had risen from $27 during 2007 to $35 at the moment.

According to the calculations made by Pew, if the overdraft had to be viewed as a short-term loan which was to be paid within seven days then the APR would amount to 5,000%.

These findings are somewhat similar to what was found by US PIRG a couple of weeks ago, which showed that most banks were non-compliant with the laws as consumers were not given access to fees and other terms regarding the accounts.

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