Making Checking Accounts Safer and More Transparent

In April 2011, the Pew Health Group's Safe Checking in the Electronic Age Project released Hidden Risks: The Case for Safe and Transparent Checking Accounts. This report examined the terms and conditions of over 250 distinct types of checking accounts offered online by the 10 largest banks in the United States as of October 2010. At that time, these banks held nearly 60 percent of all deposit volume nationwide.

Pew's research shows that it is exceedingly difficult for an average American to find the basic information needed either to select a checking account or to responsibly manage his or her existing account.

These fact sheets summarize Pew's policy recommendations to make checking accounts safer and more transparent. 

Disclosures

Depository institutions should be required to provide information about checking account terms, conditions and fees in a concise, easy-to-read format. Pew has developed a model disclosure box that provides this information. Read Pew's policy recommendations on disclosures.

Overdraft Options

Depository institutions should be required to provide account holders with clear, comprehensive pricing information for all available overdraft options so that a customer can make the best choice among overdraft options, including choosing not to provide affirmative consent—or “opt in”—for any overdraft coverage. Read Pew's policy recommendations on overdraft options.

Overdraft Fees

Overdraft penalty fees should be reasonable and proportional to the bank's costs in providing the overdraft loan. Regulators should monitor overdraft transfer fees and impose similar reasonable and proportional requirements if it appears that they are becoming so disproportionate as to suggest that they have become penalty fees as well. Read Pew's policy recommendations on overdraft fees.

Processing Policies

Depository institutions should be required to post deposits and withdrawals in a fully disclosed, objective and neutral manner that does not maximize overdraft fees, such as in chronological order. Read Pew's policy recommendations on processing policies.

Dispute Resolution

The Consumer Financial Protection Bureau (CFPB), in its study of arbitration agreements, should examine the prevalence of binding arbitration clauses and of fee-shifting provisions, including loss, costs and expenses clauses in checking accounts, and assess whether such provisions prevent consumers from obtaining relief. Read Pew's policy recommendations on dispute resolution.

Read an overview of all of Pew's recommendations.