When you cheat on your bank by withdrawing cash from a competitor’s ATM, a warning message on the screen makes it clear customers will likely face various fees. But analysts say banks are still far less forthcoming when it comes to fees tied to checking accounts.
The average checking account has around 30 fees and some banks have up to 50 individual charges, according to a 2013 survey by financial website WalletHub.com — and 20 percent of U.S. banks don’t even provide a list of these charges before a customer submits an online application. In fact, Capital One and Fifth Third Bank, a regional bank based in Cincinnati, were the only two banks to earn perfect scores in transparency in WalletHub’s survey, and less than half (48 percent) of major banks had well-marked, direct links from their checking account product pages to a full summary of fees. (On the upside, this still pales in comparison to other industries, particularly airlines, which have around 150 different optional or “ancillary” fees, says Joe Rubin, a lawyer and transportation expert.)
Banks require average daily balances to qualify for free checking, impose charges for printing checks and — in some rare cases — even closing accounts, says Ben Woolsey, president of consumer advice site CreditCardForum.com. But consumers need to do more to keep abreast of their checking account fees. Only one in three consumers perform an annual financial assessment of their checking accounts and 15 percent have never looked over the fees, according to a recent survey of 1,000 adults carried out by Kasasa, which offers checking and saving accounts at community banks and credit unions. “The Internet has democratized information, which makes it less valid to plead ignorance,” says Greg McBride, a senior financial analyst at Bankrate.com, a personal-finance research and publishing company.
To be fair, fee disclosures have become more transparent in recent years. However, at the same time the number of fees has increased. The percentage of checking accounts that were free declined from 76 percent in 2009 to 39 percent in 2013, according to a survey by Bankrate.com. The median length of disclosure for checking account agreements and fee schedules is 44 pages, which doesn’t include all addenda to these agreements or other extraneous documents, according to Pew. (On the upside, the disclosures had a median length of 111 pages in 2011.)
But while they’ve clearly made efforts to increase transparency in recent years, experts say that financial institutions still don’t always make the task of tracking charges easy. Here are five things customers should be aware of to avoid extra charges.