How Does Your Checking Account Stack Up Against the Big Banks?

Are you curious how your financial institution’s checking products compare with those of America’s largest banks? Take a look at this checking comparison study conducted by Pew, a charitable research firm. The project analyzed more than 250 types of checking accounts offered online by the ten largest banks in the US. In the study, Pew assessed variations in the key aspects and fees associated with checking products.

Banks in the study included BofA, Chase, Wells Fargo, Citi, US Bank, PNC, TD, SunTrust, Capital One and HSBC. Collectively, these banks hold nearly 60% of all deposits nationwide.

According to Pew, accountholders are not provided full information about the respective costs of fees like overdraft options, a finding that is completely shocking considering that the median length of disclosures for checking account policies is a hefty 111 pages.

Pew says a bank’s complete package of checking account disclosures is generally twice as long as Shakespeare’s ‘Romeo and Juliet.”

The research project is similar to one conducted by the Public Interest Research Group, which looked at the ethical and legal compliance issues involved with marketing checking accounts. The PIRG study looked at how fees were presented at both branches and websites.

Profile of Average Big Bank Checking Terms

Are Fee Policies Easily Located on Bank’s Website?

Fee or free

87% of checking accounts examined by Pew disclosed a monthly maintenance fee. Only 13% of all accounts (35 out of 265) had no monthly fee — commonly called “free checking.” The median monthly fee for checking accounts was $8.95. Across all accounts that charged a monthly fee, this fee ranged from $3 to $50.

While most checking accounts in Pew’s study had a monthly fee, the vast majority of these (228 accounts out of 230) also had provisions that allowed the fee to be waived if the customer met certain requirements. These requirements varied from account to account. The two most common ways for a customer to avoid paying a monthly fee were by maintaining a minimum combined account balance or by having a recurring direct deposit. A few banks allowed customers to not incur such a fee by using electronic banking rather than in-person or paper services.

Minimum Combined Account Balance

86% of the accounts analyzed that had a monthly fee (198 of 230 such accounts) waived the fee if the customer maintained a minimum combined account balance. in Pew’s study, the combined balance might include a customer’s checking account, savings account, mortgage, credit cards, lines of credit, money market account, certificates of deposit, or other accounts. The median minimum combined account balance needed to avoid a monthly fee was $2,500. The lowest instance of this requirement was $100, and the highest instance was $100,000.

Direct Deposit

In 43% of the checking accounts studied, a recurring direct deposit is an at least once every statement cycle. Of the 230 accounts analyzed that had a monthly fee, 100 of them waived their monthly fees if the customer had a recurring direct deposit. 33% of accounts with a monthly fee disclosed a required minimum direct deposit dollar amount in order to qualify for the waiver. The median direct deposit required by these banks was $100, with a range of $25 to $250.

Other Ways to Avoid Monthly Fees

While maintaining a minimum combined account balance or having a recurring direct deposit were the two most common ways that banks allowed a customer to avoid a monthly fee, several accounts had other unique requirements for waiving the charge. In the accounts in our study, these focused on the customer’s use of electronic banking mechanisms rather than in-person or paper-based services.

For example, customers who have BofA’s eBanking accounts can avoid a monthly fee if they use only self-service options (ATM, online, mobile) for deposits and withdrawals and receive only paperless statements. Citibank disclosed that it waives its Basic Checking monthly fee if the customer makes at least five qualifying transactions per statement cycle.

Minimum Opening Deposit

Eight out of ten banks and 91% of all accounts required some minimum deposit to open an account. Among all of the accounts analyzed, the median minimum deposit needed to open an account was $100. The minimum opening balance ranged from $0 to $500.

Returned Check Fee

If a customer attempts to deposit a check that does not clear, all of the banks studied charged the depositing customer a returned check fee. The median returned check fee for all accounts was $12, with a range of $10 to $40 among all accounts.

Stop Payment Fee

The median stop payment fee is $29. For those accounts that charge a stop payment fee (92%), the fee ranged from $25 to $50. The stop payment orders for nine out of ten banks lasted six months but were renewable for a repeat fee. The one remaining bank’s stop payment period was one year.

Account Closing Fee

Six out of the 10 banks examined (representing 38 percent of accounts) charged a fee if a customer closed his or her account within a specified and relatively brief period of time after the initial opening of the account. Among the banks charging a fee, this fee ranged from $20 to $30, and the period of time ranged from within 90 to 180 days of opening the account.

Pew’s Model Disclosure Box for Checking Accounts

Pew has a number of recommendations for both the general structure and disclosures associated with checking accounts, chief among them is an outline for a simpler, one-page summary of fees that would be used across the industry. Pew says disclosures today are too confusing, and thwart consumers’ attempts to comparison shop.

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