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Entries in Checking Account (3)

Friday
Sep142012

Financial Situation for Unbanked Worsened, Report Says

Hemera/Thinkstock(NEW YORK) -- The number of unbanked households in America -- those with no bank accounts -- has increased since 2009, a new study shows.

Ten million households, or one in 12, are unbanked, said the Federal Deposit Insurance Corporation (FDIC) in its National Survey of Unbanked and Underbanked Households, using 2011 data, the second survey of its kind.

The number of unbanked households increased since the FDIC’s first survey in 2009, growing 0.6 percentage points to 821,000.

Meanwhile, 20.1 percent of U.S. households are underbanked, meaning they have a checking and/or savings account but have used non-bank money orders, non-bank check cashing services, remittances, payday loans, pawn shops and other non-traditional banking means.

“It’s significant and positive that a respected public agency continues to track and study the issue of financial inclusion and, in this case, to note that the problem has, if anything, grown worse since its landmark 2009 study,” said Timothy Flacke, executive director of the nonprofit Doorways to Dreams (D2D) Fund, which makes financial products for low- and moderate-income consumers.

Flacke said the FDIC study highlights a basic fact, that “those who are disconnected from the financial system are at a significant disadvantage in trying to save and build financial security.”

The report says almost a third of U.S. households, 29.3 percent, do not have a savings account.

Flacke said that is one reason why his non-profit organization, based in Allston, Mass., supports the U.S. Savings Bond program, especially for those who are not connected or fully connected to the private financial system.

He said the FDIC study also highlights the need for innovation to make sure more people are included in the financial system.

That is reflected in the Treasury Department’s recent decision to run a public challenge, called MyMoneyAppUp, in partnership with D2D Fund and the Center for Financial Services Information, to encourage new mobile technologies to increase financial access.

The challenge asked the public to submit ideas to help Americans “shape their financial futures” for cash prizes up to $10,000.  Winners of the challenge will be announced on Sept. 28.

Copyright 2012 ABC News Radio

Wednesday
Apr272011

Checking Accounts: Fewer Consumer Safeguards Than Credit Cards?

BananaStock/Thinkstock(WASHINGTON) -- Many consumers assume the terms of their checking accounts, the most widely used financial services product in the U.S., are simple, at least compared to such other payment methods as credit cards.

But a study from the Pew Health Group shows that consumers are lost about their checking accounts, resulting in unnecessary overdraft fees and penalties.

Pew analyzed 265 checking accounts at 10 of the largest banks and found that the average checking account has a disclosure of 111 pages, an $8.95 monthly fee, an overdraft penalty fee of $35, an overdraft transfer fee of $10, and an extended overdraft penalty fee of $25 every seventh day the account is overdrawn, among other findings.

"What surprised us most is that it is so hard for consumers to understand their checking account," said Eleni Constantine, director of financial security at the Pew Health Group, the consumer-product safety arm of The Pew Charitable Trusts.  "We didn't expect this lack of transparency."

She said that's especially dangerous when nine out of 10 Americans have checking accounts.

The report, called Hidden Risks: The Case for Safe and Transparent Checking Accounts, made a number of specific policy recommendations so that checking accountholders can experience a similar level of protection as credit card users have from high fees.

A report from Moebs Services estimated that banks will take in a total of $38 billion in overdraft fees in 2011, the highest ever for the industry.  The industry received $37.1 billion in revenue from overdraft fees in 2009.

To prevent consumers from unknowingly paying these fees, Pew recommended that banks have a single page disclosure box for their checking accountholders.  Pew's model disclosure box for checking accounts includes information like the minimum deposit needed to open an account, ATM fees, account closing fees, overdraft transfer and penalty fees and the posting order in which withdrawals and deposits are processed.

Copyright 2011 ABC News Radio

Wednesday
Feb092011

Big Banks to Charge Fees for Low Checking Balances

Photo Courtesy - Getty Images(NEW YORK) - If you don't have a large amount of cash in your checking account, you may have to start paying a hefty fee to keep it, reports the Los Angeles Times.

Four of the country's largest banks - Bank of America, Wells Fargo, JPMorgan Chase and Citibank - will start charging monthly fees to customers who carry a low balance in their checking accounts. The charges could add up to as much as $100 a year.

"Wealthy consumers will be able to avoid these charges by maintaining high balances," Jeremy T. Rosenblum, a Philadelphia lawyer and consumer finance specialist, told the Los Angeles Times. "But for the poor and moderate-income people whose balances are lower, it's going to be much harder to avoid these fees."

The new fees are likely the result of new regulations on the banking industry that limit late fees and overdraft penalties that provided billions in revenue to the banks each year.

Copyright 2011 ABC News Radio







ABC News Radio