Large credit unions and banks can be blamed for elevating overdraft fees and implementing inconsistent checking account disclosures and practices, putting consumers at risk of high, unexpected costs.
That's the key finding from the just-released Pew Safe Checking in the Electronic Age Project's “Still Risky: An Update on the Safety and Transparency of Checking Accounts,” a report produced by the Philadelphia- and Washington, D.C.-based public policy non-profit Pew Charitable Trusts.
Pew's survey results reveal the U.S.'s 12 largest credit unions and 12 largest banks, by deposit value, are engaging in practices that have the potential to negatively affect nine out of 10 American adults with checking accounts.
Susan Weinstock, the project's director, said these less-than-ideal practices include putting out checking account disclosures at median lengths of 69 pages, failing to clearly lay out overdraft options and increasing overdraft fees in the past year.
“Consumers are expected to wade through long, confusing documents and may be subject to steep, unexpected fees to access their own checking accounts, which are the cornerstones of household financial management,” Weinstock said. “Consumers must have understandable, transparent information that enables them to make educated choices when comparing one checking account's costs and benefits to another.”
Pew recommends the Consumer Financial Protection Bureau or Congress make regulatory changes to help prevent unexpected checking account-related costs to consumers.
Weinstock outlines four regulatory change recommendations as follows: require financial institutions to make a disclosure box that outlines key checking account terms and conditions available in branches and online, mandate clearly laid out overdraft options, require overdraft fee amounts to be reasonable and proportional, and prohibit transaction reordering that maximize overdraft fees.
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Natasha Chilingerian
Natasha Chilingerian has been immersed in the credit union industry for over a decade. She first joined CU Times in 2011 as a freelance writer, and following a two-year hiatus from 2013-2015, during which time she served as a communications specialist for Xceed Financial Credit Union (now Kinecta Federal Credit Union), she re-joined the CU Times team full-time as managing editor. She was promoted to executive editor in 2019. In the earlier days of her career, Chilingerian focused on news and lifestyle journalism, serving as a writer and editor for numerous regional publications in Oregon, Louisiana, South Carolina and the San Francisco Bay Area. In addition, she holds experience in marketing copywriting for companies in the finance and technology space. At CU Times, she covers People and Community news, cybersecurity, fintech partnerships, marketing, workplace culture, leadership, DEI, branch strategies, digital banking and more. She currently works remotely and splits her time between Southern California and Portland, Ore.
