Checking accounts
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By BLAKE ELLIS

When it comes to checking accounts, all banks are not created equal.

According to the Pew Charitable Trusts, Ally Bank, Charles Schwab Bank (SCHW), First Republic Bank (FRC), Citibank (C) and Bank of America (BAC) top the list for consumer-friendly policies, based on its review of checking account disclosures, overdraft fees and dispute resolution policies at 36 of the nation's 50 biggest banks.

These five banks did the best job of informing consumers about checking account fees and terms clearly and concisely. They also minimize the overdraft fees consumers are hit with if they overdraw their account, and let customers take disputes to court rather than requiring them to waive their right to a jury trial, Pew found.

But even out of the highest-rated banks, none had perfect scores in every single category.

Ally Bank, an online bank, was a top pick because it doesn't charge overdraft fees when customers overdraw accounts at an ATM or during point-of-sale purchases. Ally also doesn't engage in the practice of reordering transactions from highest to lowest dollar amount when processing them, in order to maximize the number of overdraft fees it charges. But it didn't do so well in other areas. Pew found that Ally doesn't provide a grace period before charging overdraft fees, and doesn't provide a clear summary of checking account disclosures, for example.

"All banks showed there's room for improvement," said Susan Weinstock, director of Pew's safe checking project.

Fourteen banks couldn't even be ranked because details about their account policies aren't available to the public without visiting a branch in person.

The lowest-rated banks included First Niagra Bank (FNFG), KeyBank (KEY), Union Bank (MTU), Sovereign Bank (SAN) and First Tennessee Bank (FHN). A full list of individual bank ratings can be found on Pew's website.

Sovereign Bank ended up on the bottom largely due to its overdraft policies. Pew found that Sovereign reorders transactions from highest to lowest amounts to boost overdraft fees. The bank also charges overdraft fees when an ATM withdrawal leads a customer to overdraw their account -- something many of the higher-ranked banks don't do, according to Pew.

Union Bank, meanwhile, was found to have some of the worst account disclosures. Pew said it fails to provide an easy-to-understand summary of its terms and fees and isn't clear about overdraft options and fees.

Union Bank and Sovereign Bank didn't immediately respond to requests for comment.

Pew recommends that the Consumer Financial Protection Bureau, the government's consumer watchdog, introduce new rules requiring banks to clarify their disclosures and provide clear and fair overdraft options. It also wants the bureau to require banks to charge overdraft fees that are "proportional" to what it actually costs a bank to provide the service. Finally, Pew urges the agency to ban banks from including mandatory binding arbitration clauses in checking account agreements, which are typically meant to prevent consumers from taking legal action against a bank.

"Better clarity and transparency for checking accounts will make this market more competitive and, as a result, more efficient," Pew stated in its report. "The [CFPB] has the authority to require changes to this fundamental marketplace, so that all consumers will have access to banks serving their customers through best practices."

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25 Comments

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dewfloor

My "FREE" checking account only costs me $6.50 a month.

June 17 2013 at 10:00 AM Report abuse rate up rate down Reply
Sneakers

Sovereign Bank USED to be my bank~~ They charge terrible fees.....take so much more than what they are supposed to and they have NO MERCY on anyone!!!! They have lost quite a few employees also and that makes a customer wonder why?? Hmmm....maybe treating them like their customers also?? I just know I would not go back to them at all. Trying to get other family members to withdraw from them also.

June 02 2013 at 5:57 PM Report abuse rate up rate down Reply
Laura

I deal with a small bank located in my city and has been here since 1956!

June 02 2013 at 11:27 AM Report abuse +1 rate up rate down Reply
arenadood

We have always preferred Credit Unions. Have never had a problem with them and they tend to pay better interest on savings and CDs.

June 02 2013 at 11:05 AM Report abuse +1 rate up rate down Reply
Bob

Banks in general have operating procedures driven by greed. Join a credit union, much more honesty and a lot less fees.

June 02 2013 at 9:01 AM Report abuse +1 rate up rate down Reply
poorkitty1

I use Chase and I think they are the best, I have direct depost so my checking is free and if you do if you do overdraw you have till the end of the banking day to get money in your account, the people are always friendly and go out of the way to help you.

June 02 2013 at 8:32 AM Report abuse rate up rate down Reply
Ron

I only use a Credit Union! There I have a say in how it's run and can bring up a complaint to a board, try that at your big bank! If I need emergency money I can write a check and they'll loan me the money in $100.00 increments if my savings account won't cover it. They also offer many other benefits that banks don't, discounts on insurance, amusement park tickets, et cetera.

June 02 2013 at 1:29 AM Report abuse +1 rate up rate down Reply
MIKEY'S SCREEN

Bank of America? I had BofA for over 40 years and just several years ago I pulled all my stocks and bonds, house and business mortgages, checking and saving accounts and went to another bank because of their INADEQUATE customer service. BofA doesn't care about customers, at least not in the Central California Valleys. I even attempted to contact their corporate headquarters and that is when I found out that they moved out of San Francisco to God Knows Where.

June 02 2013 at 12:44 AM Report abuse rate up rate down Reply
Lipsmacken

First off I wouldn't trust BOA with a penny of my money, who paid for this survey? BOA? I live in the DFW area of Texas and I bank with a local bank. No fees at all, close enough to get to fast, special alerts, if (which I never have) I should have a NSF it comes from my savings at no cost to me. I have been with them for sometime now and just love them. I was with another local bank for over 20 years but they were bought out by BBVA Compass which is based in Spain. The first thing they did was add a fee to your checking account that did not have a 300 or 350 direct deposit and it was like a 10 dollar fee. Screw that. So I changed and have never been happier.

June 01 2013 at 9:07 PM Report abuse +1 rate up rate down Reply
nolangallow

Bank of America?

June 01 2013 at 8:40 PM Report abuse +1 rate up rate down Reply