The median length of checking account disclosures is a mind-numbing 69 pages. But a growing number of banks are now cutting through the clutter and offering shorter, simpler breakdowns of major fees and terms. It’s a big help to people who want to comparison-shop. Unfortunately, though, it doesn’t make the hugely annoying process of actually switching banks any easier.
The Pew Charitable Trusts’ Safe Checking in the Electronic Age project tallied up the overwhelming scope of account disclosures, and it’s been pushing financial institutions to create a one-page form that lists, in plain English, what fees customers can expect to pay for things like monthly maintenance, insufficient funds, and the like.
“Our ultimate goal is to have the CFPB write rules to make this uniform,” Susan Weinstock, the project’s director, says. In theory, this would make checking out account details as easy as turning over a bag of chips to see its nutrition information. Even with the variations, though, these forms make it much easier to get a sense of what you’d pay and how to avoid fees without wading through pages of legalese in six-point type.
When Bank of America signed on last week, it brought the number of big banks adopting simpler disclosures to five. Along with BofA, Citibank, TD Bank, Chase and Capital One all adopted their own versions of Pew’s model disclosure box. Together, these institutions comprise about 25% of consumer deposit volume in the country. There are also a handful of credit unions and smaller banks on board.
“We’re hoping this spurs people to do more comparison shopping,” Weinstock says. “At least now you have a sense of the fees and terms.”
For people who need to switch banks because of a move or another big life change, this is a big plus. Unfortunately, better transparency about account details doesn’t make it easier for people to actually make the switch. That’s still a protracted, often frustrating ordeal, so much so that a majority of people who intend to change banks never bother to do so.
Earlier this year, nonprofit group Consumers Union conducted a research project and concluded that it’s practically impossible to find account closure information in a single, convenient place. When they conducted secret shopper visits, some bank employees gave them erroneous information. Even more annoying: About half of big banks charge you to close your account if it’s only been open for a matter of months.
Still, simplified disclosures represent clear progress on the account disclosure front; it’s a welcome change from the old norm of getting zinged by surprise fees, which is one of the biggest reasons people get ticked off at their banks. But we’re still only halfway to a market where customers can switch banks as easily as they can change what brand of juice they buy or what barbershop they visit.