Reasons for checking accounts to get costlier

The checking accounts that were the main component of the financial mainstream seem to have undergone some radical changes in the recent times. Now banks are making a shift towards the business models which have been embraced by the airlines, where a product is unveiled and new fees is being added as and when required even on services that were already present.

What is worse is that consumers may be unaware about the fees that they might be charged until much later. As per the new study that was conducted by the Pew Charitable Trust, it was found that most of the disclosures on checking accounts consisted of 111 pages on an average. There was also lack of transparency with regard to the fee information. Even the research conducted by the watchdog group US PIRG had come to a similar conclusion. Only a very small percentage of the banks actually provided information that was accurate.

During the study, it was noted that at least 23% did not give the proper fee schedule and the remaining 20% gave information that was inaccurate, stated Ed Mierzwinski, Consumer Program Director.

One of the most visible charges on the checking accounts is the monthly maintenance fee that has been implemented by the biggest regional as well as the national banks. There are many banks that have even rolled back on their debit card rewards as well as perks etc. There are a number of banks that even charge for hard copies such as paper statements and check images. For some of the no-frills accounts, there is even a monthly fee which kicks in if the consumer wishes to speak to the teller.

The prime reasons for this nickel and dime business by the banks is because of the overdraft fees and the interchange fees. The Federal Reserve had issued prohibitions against banks against enrolling customers automatically into overdraft protection programs. Earlier, banks used to process the transactions on debit cards even if the purchase amount was over and above the balance in the account. The customers were later hit by an overdraft fee of $35. Sometimes customers ended up racking hundreds of dollars if they didn’t realize that they had overdrawn.

Even the order of the transactions was manipulated by the banks in order to trigger the overdraft fees. Now the interchange fees would also lowered to around 12 cents for every transaction on the debit card, whereas it has been 44 cents per transaction until now.