Senators Take Aim at Bank Accounts' Fine Print

Senators Take On Bank Account Fine Print
Senators Take On Bank Account Fine Print

Have you ever really read all the disclosures that came with your bank account? Nope -- we haven't either. And that should come as no surprise: The average length of banks' fee disclosures and checking account policy paperwork is 111 pages, according to a survey by Pew Charitable Trusts.

That's way too much fine print, say Sens. Dick Durbin (D-Ill.) and Jack Reed (D-R.I.). Last week, the two called on all banks to make those disclosures just one page long.

They offered as an example a one-page disclosure that Pew designed. On Monday, Durbin pressed banks in Illinois to adopt the new disclosure box.

"Consumers have demonstrated that they will no longer stay with banks and credit unions that disrespect them by failing to charge fees in an upfront and fair manner," Durbin wrote in a letter to the financial institutions, reported The Hill.

The cost of not reading and understanding those disclosures adds up to big costs for bank customers. A 2009 study of 917 consumers found that households paid a median of $43 a month in credit card and checking account fees, including credit card interest, ATM and overdraft fees.

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"People are unhappy with fees, but where are they going to go?" says Susan Weinstock, director of Pew's Safe Checking in the Electronic Age Project. "They [could] end up worse off because they won't read 111 pages of disclosure [for a checking account]."

The new proposed disclosure format outlines all the basic checking account terms and conditions -- including interest rates, ATM fees, overdraft penalties and account closing fees -- in clear terms, using a uniform reporting style across all financial institutions.

The senators also asked the new Consumer Financial Protection Bureau to lend a hand on enforcement, and require banks and credit unions to post this disclosure on their websites, the Los Angeles Times reported.

Two large credit unions are already on board -- the Pentagon Federal Credit Union and North Carolina State Employees Credit Union -- the Washington Times reported. The Consumer Bankers Association is also supporting fee disclosure simplification.