By Mitch Lipka
June 18 Comparison shopping for a bank or credit
union checking account often ends up turning into a major
research project. With disclosure forms that contain the nuts
and bolts of the accounts averaging 69 pages of tiny,
legalese-filled print, the most important details can be
difficult, if not impossible, to extract.
But that longstanding banking tradition is in the process of
change, as some of the biggest banks and credit unions in the
country are siding with a non-profit's efforts to make checking
account terms easier to compare.
The Pew Charitable Trusts, which has been studying the issue
of checking account disclosures and advocating for their
simplification, says there is now some serious momentum.
JPMorgan Chase adopted a simplified checking account
disclosure form in December at the same time two of the three
largest credit unions, North Carolina State Employees' Credit
Union and Pentagon Federal Credit Union. In April, TD Bank also
Bank of America now says it will join them before
the year is out. "We support Pew's proposal on transparency of
account information," BofA spokeswoman Betty Riess said, "and
plan on implementing a simplified disclosure based on their
model in the second half of this year."
While even the shortened disclosures are not Pew's ideal -
it would like a single-page government-mandated document akin
the nutrition labels on food - those in use so far do boil
things down. The longest of the simplified disclosures is three
pages, compared with 153 for the longest disclosure forms,
according to a Pew study released last week.
The shortened forms slice away much of the lawyer speak to
explain how much it takes to open an account, whether there's a
monthly fee (and what you have to do to avoid it), how much will
be charged if a check bounces and the bank's policy on when
deposits are credited.
In addition to those details, here are some other items
you'll find on the new disclosure forms:
* ATM fees (charges when using one of the bank's own
machines, a different bank's machine or if you use one outside
* Various fees, from stopping payment to ordering new checks
* How withdrawals and deposits work
* Other miscellaneous charges, including wiring funds and
getting a copy of a statement.
Pew developed a model form that both Chase and TD adapted to
include additional details, distilling information from their
far longer checking account disclosures into three-page
documents. Chase spokesman Patrick Linehan says, "The reaction
from customers and consumer advocates has been very positive."
Susan Weinstock, who is heading Pew's efforts on the issue,
says she hears from a couple of banks each month asking about
adopting a version of the simplified form and estimates about
eight are in the process of making the change.
Some banks say the process takes months because of legal
reviews. But the North Carolina Employees' Credit Union,
Weinstock says, turned its around in a day.
ON THE SAME PAGE
Resistance is not the issue. The banking industry, while
acknowledging some concerns, would prefer, as Pew' does, a
"In general, the banking industry supports the concept of a
simplified checking account disclosure," says Carol Kaplan, a
spokeswoman for the American Bankers Association. "We recognize
that there are many obstacles to achieving that, and we look
forward to working with all banks and the agencies to find
something that's acceptable, but we have many concerns about the
legal ramifications of leaving out important information that is
TD Bank Senior Vice President Ryan Bailey says the process
of shrinking its 40-page document to three pages made sense
because it provides "transparency" to consumers. But for the
reasons Kaplan expressed, the bank retains and still distributes
the larger document to cover its legal bases.
In addition to just allowing for comparison shopping, the
simplified forms can be educational, Weinstock says. That's
particularly the case for those who might not realize that many
banks change the order in which checks are processed - paying
not the first to arrive, but the largest amount, something that
would result in more penalties if there are not sufficient funds
to cover the checks. She says consumers could get some clarity
on the continuing confusion about opting in or out of overdraft
protection - an issue in which many misunderstand that opting in
is what could subject them to steep overdraft penalties.
"We'd like to see this box (the disclosure form) in bank
branches and online," Weinstock says. "The more banks that do
it, the better off we'll all be. Consumers can pick the one that
works best for them."