Last Tuesday the American Banking Association (ABA) released a survey showing that “sixty-five percent of consumers spend $3 or less in monthly fees.”
Not the whole story. If you’re scratching your head and wondering how the ABA survey could show such findings, the answer is simple, they didn’t ask the whole question. The ABA survey asked 1000 customers to “estimate” how much they spend on banking services such as checking account maintenance and ATM fees. But, a report “Out of Balance ” released July 11. 2007 by the Center for Responsible Lending (CRL) , shows that banks are making big bucks in “overdraft” protection loans to the tune of $17.5 billion a year. The larger problem here is that most customers aren’t aware that they have overdraft protection as they don’t have to give their bank written consent before the loan is made to cover insufficient funds. The bank quickly recoups its loan plus a fee, as much as $34, automatically, from the customer’s next deposit.
The ABA study didn’t ask customers if they were happy with the fees they were paying for overdraft protection –loans that they didn’t request to begin with.
HR 946 (Truth in Lending) would require banks to get customer approval before providing overdraft protection, tell consumers how much the interest will be (often as much as 300%) and give the consumer choice when making a purchasing by prompting the customer to either accept the loan to cover insufficient funds or to cancel the purchase at the point of sale. Link to “Out of Balance” article
And, speaking of ATM fees… In July of this year Bank of America increased ATM fees to $3 for all non customer, an increase of 50% . What is the ABA’s response to high ATM fees charged to consumers by banks other that their own? “Avoid foreign banking fees by using your own bank’s ATM.” The ABA study apparently also didn’t ask customers how much they pay a month in ATM fees for using banks other than where their checking accounts reside. Check out our recent blog on the B of A’s ATM fee hike.
The ABA survey was conducted by Ipsos Reid on July 24-26
This blog was submitted by Brent Scott, our new Financial Services Organizer.