A chart of bank service fees in the Business section Friday should have noted that the minimum balance to avoid monthly service charges was for non-interest-bearing checking accounts. Also, in the accompanying article, Joan Claybrook was misidentified. She is president of Public Citizen.
The cost of bouncing a check in the Washington area can range from $10 to $27.50, according to a study released yesterday by Public Citizen's Congress Watch, a nonprofit consumer interest group.
Congress Watch president Joan Claybrook said large differences in bank and savings and loan association charges and fees have developed in the wake of deregulation and that relatively little information has been provided to customers to allow them to shop around.
The group's study of 31 area financial institutions, released yesterday, provided examples of the range of costs, including the low-end charge for a bounced check at National Permanent Bank and the $27.50 charge at First National Bank of Maryland. (The 31 institutions included in the survey are banks and thrifts with at least one branch office.)
Other comparisons found: Washington Federal Savings & Loan is the only financial institution in the metropolitan area that doesn't charge a monthly service fee for its interest-bearing checking accounts. Dominion Federal Savings and Loan and Independence Federal Savings and Loan do not impose fees on their NOW accounts, provided the account holder elects not to receive canceled checks. Most other local institutions charge at least $60 a year for interest-bearing checking accounts, with the highest fee -- $150 a year -- charged by United Bank of Washington. To avoid service fees, United National Bank requires a minimum daily balance of $2,000; Home Federal Savings & Loan demands a $100 daily minimum. McLachlen National Bank, United Virginia Bank and Riggs National Bank take one to two days to credit deposits of local checks to customers' accounts. Washington Federal, on the other hand, places a six- to 10-day "hold" on deposits of local checks before crediting their customers' accounts.
"It costs anywhere from zero to $100 or more a year to maintain a checking account," said Claybrook, who heads the group founded by Ralph Nader. Yet, she charged, few banks and savings and loans are willing to give consumers the information they need to comparison shop to find the best deal for them.
"It is humanly impossible" to comparison shop, Claybrook said. Even if banks release the information, they calculate the fees in so many different ways that "a consumer needs an accounting degree to sort them out," she said.
For example, she noted, some banks charge a flat monthly service fee; others charge per each written check; still others have a graduated fee schedule depending on how much money a customer has in the bank. And still others calculate a fee based on a minimum daily balance while some base their fees on an average monthly balance.
"The market is not working and consumers are paying the price," Claybrook said. "Between 1978 and 1982, bank fees have doubled to cost consumers $10.8 billion a year."
Claybrook called on the financial institutions to prominently post their bank account fees and policies so consumers can see them. "If banks are unwilling or unable to make this information readily available on their own, then Congress must act to ensure standard disclosure," she wrote in a letter to the presidents of the 31 banks her organization surveyed.
Joining Claybrook at the press conference was Rep. Charles E. Schumer (D-N.Y.), a member of the House Banking Committee, who said he intended to introduce legislation next month to require banks to disclose their full range of fees and limits for all of their deposit accounts. Additionally, the legislation would impose a three-day limit on the length banks can hold checks before crediting a customer's account.
"It has become popular to discuss the banking industry as a supermarket," Schumer noted. "What this survey shows is that consumers are walking through the aisles blindfolded." Schumer said he was confident such legislation could pass, especially if it is included in a comprehensive banking bill which would give banks some of the benefits they have been seeking, such as interstate banking.
Bankers, however, said a disclosure law was unnecessary, arguing that consumers already get the information they need -- and often more -- to make decisions. "I think there's a lot of disclosure out there," said Daniel Buser, director of public relations for the American Bankers Association. "All you have to do is go into a bank and ask about their fees and you get a card in most cases," listing the fees.
Tom Riley, senior vice president at Washington Federal, said that his institution prominently displays notices of many of its bank fees and services throughout its branches. Additionally, he said, Washington Federal has one of the longest "hold" policies because "historically it takes longer for a savings and loan to clear checks than it does for banks, which use the electronic banking system. We have been more dependent on the mail, although electronic processing is coming to the S&L industry."
As it does, Riley said, the bank will consider revising its hold policy.