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U S PIRG bank-fee study Go to a CU or small bank
MADISON, Wis. (11/20/12)--Free checking is alive and well among credit unions and small banks, but not so at large bank with more than $10 billion in deposits. Only one-fourth of the big banks offer it, according to a new survey from the U.S. Public Interest Research Group (U.S.PIRG).

For its 2012 survey report, "Big Banks Bigger Fees: A National Survey of Fees and Disclosure Compliance," PIRG staff visited 250 bank branches and 116 credit union branches in 17 states and the District of Columbia to determine if compliance with the Truth in Savings Act requirement that "prospective customers" have the right to "complete" schedules.

Fewer than half the banks (48%) complied easily with the request. After two or more requests, eventually a total of 72% complied with the law. Credit unions had the highest percentage with complying with fee disclosure requests on first request --64% compared with all bank branches' 48%--and on the second, successive requests, if needed. They also gave the least partial or wrong information--6% compared with all banks' 16%.

Researchers found a variety of free or low-cost checking options, with 60% of credit unions providing totally free checking. That compares with  24% for big banks and 63% for small banks do.  In a survey of just the banks (credit union data will be the subject of a separate report), small banks had lower average checking account fees, overdraft fees and foreign or off-us ATM fees and lower minimum required balances to avoid the fees. U.S. PIRG said it was surprised to learn that one-fourth of small banks no longer charge regular checking account customers the off-us ATM fees. This, said the report, undercuts one of the major benefits often cited by large banks--access to large no-cost ATM networks.

Other findings:

  • Free checking remains widely available at small banks and credit unions. While the biggest banks are raising fees and eliminating free checking, most continue to offer free checking with direct deposit.
  • Free accounts are widely available at credit unions and small and regional banks, a finding that has been obtained by others, the survey noted.
The report did note that some credit unions could explain the basic terms better in their disclosures but that they generally had "fewer and lower fees than banks."

In detailed tips to consumers, the report listed as its first tip: "Choose to bank at a credit union instead of a bank."  In explaining, it noted credit unions' structure, services, and said that "average interest rates for loans are lower at credit unions than banks, and average rates for deposits are higher. That is a better deal both ways."  Its second tip was "Choose a local or regional bank."

Among the report's advice: "Shop around. Look for better accounts. Bank at a credit union, not at a bank. Credit unions are member-owned, lower-cost alternatives to banks and often offer the same variety of services. It is easier to qualify for membership than most consumers think. Certainly, consider banking at a small bank, not a big bank. Consider moving your money by voting with your feet."
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