Best Banks For Checking Accounts

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Best Banks For Checking Accounts

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This chart (click to read full size) shows the best/good practice scores for the banks surveyed. As you can see, nothing is close to perfect.

Unless you’ve been hiding under the bed for the past six years, you probably know that the banking industry isn’t exactly loved by many American consumers. As a reaction to public sentiment (and the threat of regulation), many banks began to phase in some more consumer-friendly practices, but a new study shows that the change is not across the industry and that many banks are left behind in the year. .

In the latest Safe Checking report [PDF] from the folks at the Pew Charitable Trust, researchers looked at the disclosure, overdraft, and dispute resolution policies of the nation’s largest banks to determine whether these institutions are upfront, fair, and honest. (or as upfront). , fair, and honest as banks can be expected) with their customers about the ins and outs of their checking accounts.

Ironically, some of the most publicly reviled names in banking, including Bank of America and Citi, are institutions that have many of the best practices. But let’s not pat anyone else.

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For years, reading and understanding all the terms and disclosures for a basic checking account required a magnifying glass, a dictionary, and some free time.

For example, in 2011, Pew created a model summary disclosure box that shows banks how they should list key fees and checking account requirements in an easy-to-understand format. While 18 banks have since adopted a form based on the pew model, only eight of the 50 largest banks – JPMorgan Chase, Bank of America, Citibank, Wells Fargo, TD Bank, Capital One, Fifth Third Bank, Webster Bank – sponsored it. the level of transparency of disclosures.

The rest of the banks are hit and miss in this category. For example, PNC is clear about overdraft transfers and penalty fees, but does not clearly disclose its opt-in policy for overdrafts. Meanwhile, Pew says First Niagara Bank is not transparent in any of these categories.

Due to the lack of standardization in the industry, Pew asked the Consumer Financial Protection Bureau to require banks to provide information about checking account terms, conditions, and fees in a “uniform, concise, easy-to-read format that can be used online. and financial institution branches.”

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First, there are banks that do not allow customers to check overdraft accounts (or do not charge fees for overdrafting) at ATMs. Only six banks ā€” Citibank, Charles Schwab, USAA, Ally, First Republic, and City National Bank ā€” earned one star here.

The same six banks as Bank of America also have policies that prevent primary checking account holders from overdrafting when they use their debit cards to make point-of-sale purchases.

Of greater concern – and which is the subject of pending legislation – is the order in which banks process customer transactions. Many banks will process transactions in order from largest to smallest dollar amount.

Example: Let’s say I have $125 in my checking account and the bank has three transactions – of $90, $15, and $50 – to process. If the bank processes these transactions in descending order, I will overdraft after the second transaction, resulting in $35 twice (for a $50 purchase and $15 purchase) in addition to $30 of the actual overdraft I had acquired. So I’m now $100 in the hole in the bank.

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If those transactions are processed in ascending order, I won’t overdraft until the third transaction. I still overdrafted $30, but only paid one overdraft fee for $35, and therefore only owed the bank $65.

According to Pew, the following banks do not engage in transaction processing practices from highest to lowest: Citibank, U.S. Bank, HSBC, BB&T, Charles Schwab, USAA, Bank of the West, Allied, First Republic, City National Bank, Frost Bank, OneWest Bank, Associated Bank, Zions First National, Signature Bank, Susquehanna Bank, and Bank of Hawaii.

Other banks – JPMorgan Chase, Wells Fargo, Niagara First, Fifth Third, TCF National, Comerica, Union Bank – have been involved in only reordering limited transactions, a practice the pew claims is better than nothing, but still not as consumer-friendly as it is could be.

Another bad practice of some banks includes setting a threshold before charging the full overdraft penalty. So, overdrafting your account by a dollar or two at the following banks may not result in a hefty $35 fee: JPMorgan Chase, Wells Fargo, U.S. Bank, PNC, HSBC, BB&T, SunTrust, Capital One, Fifth Third, Charles Schwab, USAA, Bank of the West, Allies, City National Bank, Frost Bank, First Tennessee, OneWest, Zions First National, Webster Bank, TCF National, and the Bank of Hawaii.

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And some of the following banks give customers a grace period to cover overdrafts, so customers aren’t charged a fee if the transaction is processed a day before their paycheck is deposited: Wells Fargo, U.S. Bank, PNC, HSBC, Capital One, Fifth Third, Charles Schwab, West Bank, Webster Bank, and Bank Hawaii.

Click the image to see how each bank surveyed fares in the Dispute Resolution category.

How banks handle complaints and disputes is one of the reasons many consumers are unhappy with the industry, which has a long history of ignoring customers with valid concerns to resolve. .

And it has become more complicated in recent years with the rush of all the major slapping companies obliged to bind arbitration clauses to their contracts, stripping consumers of their right to challenge disputes in court.

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So it is not surprising that only a few banks – Bank of America, PNC, TD Bank, HSBC, Capital One, Fifth Third Bank, RBS Citizens, Comerica, Bank of the West, Ally, First Republic, Commerce Bank, Signature Bank, Susquehanna Bank , and Bank of Hawaii – currently do not have a mandatory arbitration clause in their terms for checking account customers.

There are two additional banks – Charles Schwab and Associated Bank – that have arbitration clauses but do not use these clauses to prohibit class actions. However, it’s worth noting that Schwab’s decision not to ban class action lawsuits may be temporary, as the bank is asserting its right to do so.

Of the banks that use forced arbitration clauses, there are six that allow customers to opt out by notifying the institution in writing – JPMorgan Chase, SunTrust, KeyBank, Sovereign, First Niagara, and TCF National.

In addition, the 26 banks surveyed (see chart above for names) did not include clauses in their account agreements that required consumers to pay the bank’s losses, fees, and charges and even whatever the outcome of the dispute was. And 34 banks have an arbitration exception that allows certain disputes to be handled in small claims court.

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Banking does not have to be expensive. Here’s a list of great free checking accounts that don’t have high fees or high balance requirements.

Open a new BMO Harris Smart Advantageā„¢ Account online and earn a $200 cash bonus if you have a total of at least $4,000 in eligible direct deposits within the first 90 days of account opening. Offer is limited to one per customer and is not available to existing BMO Harris personal checking customers (including joint account signers) or those who have closed their BMO Harris personal checking account in the past 12 months. applicable conditions.

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Upgrade is a financial technology company, not a bank. Checking and savings accounts provided by Cross River Bank, Member FDIC.

Luckily, this free checking account lets you bank for free without having to keep a large minimum balance.

Whether you’re looking for quick branch access or quick online checking, one of these accounts will suit your needs.

Tip: A checking account is a great way to teach kids about money management. Find out which accounts you can open for your children and how

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