New Survey Shows Free Checking Widely Available At Small Banks But Banks Still Hiding Fees from Consumers

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Boston, November 15– A survey of hundreds of banks and credit unions in 24 states and the District of Columbia found that free checking remains available at more than 6 out of 10 small banks and credit unions but was only found at one-quarter of surveyed big banks (those with over $10 billion in deposits). The survey released today by the Massachusetts Public Interest Research Group, MASSPIRG, also revealed that fewer than half of branches surveyed obeyed their legal duty to fully disclose fees to prospective customers on the first request, while 12% provided no fee information at all.

The report, Big Banks, Bigger Fees: A National Survey of Bank Fees 2012, includes consumer tips and a local comparison shopping guide. “Despite concerns that the days of free checking are gone, this report shows that is not the case,” said Deirdre Cummings, Legislative Director with MASSPIRG.  “Consumers should consider moving their money to banks who offer the best deals and lower fees, most often found at small banks or credit unions and not the Big Banks.”

Surveyors visited 250 bank branches in 17 states and the District of Columbia to compare fees and determine whether banks were complying with the 1991 Truth In Savings Act, which requires disclosure of all account-related fees to prospective customers. In 2008, the U.S. Government Accounting Office (GAO) issued a report finding that researchers “could not obtain” complete fee schedules at 22% of bank branches visited. PIRG found identical results in its 2011 report and some improvement in 2012. The report also compiled bank fees from an examination of the online websites of a total of 330 banks in a total of 24 states and the District of Columbia. The survey found that full fee disclosure information was often hard to find online and only available at 62% of big banks surveyed and just 29% of small banks.

“The Truth In Savings Act is a simple law that helps consumers shop around,” said Cummings. “But when less than half the banks give consumers the basic fee information as required, that harms consumers who cannot easily compare fees and shop around.”  

Among the findings of Big Banks, Bigger Fees :

  • Only 48% of banks visited provided researchers with fee schedules as required by law on their first request. After two or more requests, eventually a total of 72% complied with the law.
  • More than 1 in 10 (12%) never complied and refused to provide fee information, claimed that they didn’t have it, or told researchers to “go online.”
  • Researchers found a wide variety of free or low-cost checking options, with 63% of small banks and 60% of credit unions providing totally free checking. Although the biggest banks have recently tightened requirements to obtain free checking (available at 24%), it is still available at more than half of big banks with a regular direct deposit (59%).
  • The survey found that on average, small banks had lower checking account, overdraft and foreign or off-use ATM fees, as well as lower balance requirements to avoid checking fees, than big banks.
  • Of the 17 banks and credit unions surveyed in Massachusetts, 12 or 70%, offered free checking accounts.

A shopping guide included in the report compares banking options, directs consumers to free and low-cost checking choices, and provides a list of fees that consumers should look out for when picking a bank. The group urged consumers to vote with their feet when they found that bank fees were too high.

“Big banks are doing what they always do – raise fees – but trying to blame regulation for it,” said Cummings. “But free checking is still there for consumers who look for it, and there are lots of ways to avoid high bank fees.”

“Consumers should also know that the Massachusetts “18-65 law” allows consumers under 18 and over 65 years old to have a free savings and checking account at a Massachusetts state-chartered bank.” advised Cummings.

MASSPIRG also made a series of recommendations to the Consumer Financial Protection Bureau, which took over most consumer rule-writing for banks and other financial firms in July 2011. The CFPB also took over supervision of all big banks. It called on the CFPB to enforce the Truth In Savings Act, and to require banks to post fees on the web in searchable formats and make fee disclosures in a clear, tabular format—not buried in cumbersome multi-page brochures hidden deep inside websites.

“Banks will continue to ignore the Truth In Savings Act and other consumer laws until the CFPB tells them to do a better job,” concluded Cummings. “Consumers do have more options than they think they do, but the CFPB can make it easier to shop around.”



MASSPIRG, the Massachusetts Public Interest Research Group, is a non-profit, non-partisan public interest advocacy organization that takes on powerful interests on behalf of its members, working to win concrete results for our health and well-being.