Banks are doing a poor job of letting customers know about the fees they could face, even as those banks charge more than ever for some services, a watchdog group says.
The Public Interest Research Group found it was nearly impossible for consumers to shop around for the best deal when it came to fees for services such as checking accounts, ATM charges and overdrafts.
It is a trend that has not gone unnoticed among South Jersey bank customers, including Fernando Colon, 23, of Egg Harbor Township.
Colon said he changed his normal banking habits after he realized he was being charged a fee every time he moved money from his savings to checking accounts, which he did routinely to pay his monthly bills. Now he maintains the balance in his checking account through direct deposit of his paycheck.
“It’s my money. I don’t know why I can’t freely move it from one account to another at the same bank,” he said. “It makes me want to just keep my money under the mattress.”
The lack of transparency is especially troubling as banks are relying more heavily on fees to generate revenue following the 2007 recession and the 2008 home-mortgage collapse, the nonprofit watchdog group said.
“We see it as an under-the-radar issue,” said Peter Skopec, spokesman for the New Jersey chapter of the Public Interest Research Group.
“Generally, people agree that people should choose a company based on the services they provide. It shouldn’t be that banks can hide the fees they charge and mislead customers in this way,” he said.
Fewer than half the 250 banks the organization visited in New Jersey and 17 other states last year immediately provided a copy of their fee schedules when asked. One in four never complied with repeated requests.
Those that did not provide their fees claimed they were available only to account holders, sent customers on a fruitless online search or provided only some of their fees, according to the Public Interest Research Group.
Skopec said New Jersey’s smaller banks and credit unions were more transparent with customers than some larger national banks the group examined. For example, Fulton Bank in Bridgeton immediately provided its full fee schedule upon request to a visiting researcher.
But the group said branches of large banks, including Capital One Bank and TD Bank, both in Toms River, did not provide a complete list of their fees despite three requests.
“It is a lot of money. It’s not an open marketplace. It’s not fair competition,” he said. “What we’re encouraging regulators to do is to treat banks like credit card companies.”
By law, credit card companies must disclose their interest rates in consistent, transparent terms on applications and advertisements. Likewise, banks in New Jersey are obligated to disclose their schedule of fees to customers upon request, said Ed Rogan, spokesman for the state Department of Banking and Insurance.
Ideally, banks should post all their fees online in a place that would make it easy for customers to find and comparison shop among lenders, he said. But he was not aware of any specific state regulation to that effect.
“Banks are required to disclose fees connected with anything: ATM fees, balance levels, fees if you get a document from them or ask for an account balance. They’re required to disclose all of that when you open an account,” he said.
Rogan said state-chartered banks generally do a good job of disclosing their fees upon request. But he conceded they might not make it easy to compare fees, since each advertises them online as services with terms unique to each customer account.
“It’s not that they don’t disclose it. Sometimes the information might be hiding in plain sight. You’re given a ton of information. It’s not plainly written,” he said. “It’s a conversation we have with state banks all the time. Do your disclosure in plain language that consumers can understand. In most cases, they do that.”
Rogan said New Jersey residents who are denied a copy of their bank’s fee schedule or otherwise are not satisfied with the transparency of their local bank’s fees can file a complaint with the state Department of Banking and Insurance under the Consumer Assistance tab at www.dobi.nj.gov.
The New Jersey Bankers Association, a trade group, said banks are seeking ways to generate revenue to make up shortfalls caused by record-low interest rates and other repercussions from the home-loan crisis and the recession.
“There’s no question now revenues generated by loans are way down. The net interest margins that banks are dealing with have tightened considerably in this low-rate environment,” association President John McWeeney Jr. said.
Federal rules that went into effect in 2011 cut back on “swipe” fees, the charges banks levy on merchants for debit purchases. And banks face stricter restrictions on the overdraft fees they charge customers whose accounts run short.
“They’re looking for other revenue sources. But I don’t think they’re targeting consumers with a lot of new fees — for competitive reasons. That would backfire on them and they’d lose customers,” he said.
McWeeney said he suspects the noncompliance that the Public Interest Research Group found was due to human error, not problems inherent to New Jersey banking.
“I interpret that as more of a training issue than anything. I don’t think there’s a conspiracy by the banks to not display fees,” he said.
Bankrate.com found in its annual survey that banks nationwide were charging more than ever for checking accounts last year. The company found that banks were charging higher maintenance fees, ATM fees and overdraft charges.
But the company also found that 72 percent of the people they surveyed said they would switch banks if they had to pay higher fees.
Karan Erlandson, of Linwood, said she switched to a credit union a year ago because of the number of fees she and her husband were paying at their national bank.
“It really adds up. That’s hard-earned money,” she said. “We do a lot of online banking now.”
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