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Free checking disappearing at big banks, remains available at smaller institutions

A recent survey of banks and credit unions in 24 states and the District of Columbia revealed that free checking is still widely available at smaller financial institutions while few big banks offer the service.

The report by the Ohio Public Interest Research Group found that six out of 10 small banks and credit unions offer free checking, but only one-quarter of big banks – institutions with more than $10 billion in deposits – offer the service.

“Consumers should reject the myth that they days of free checking are gone,” Tabitha Woodruff, a public interest advocate at the Ohio PIRG, said. “Consider moving your money to a small bank or credit union to avoid those big fees at the big banks.”

The survey also found that fewer than half of all branches surveyed complied with their legal obligation to fully disclose fees to customers on the first request, while 12 percent of branches provided no fee information.

Surveyors visited banks to determine whether they were in compliance with the 1991 Truth in Savings Act, which requires banks to provide a disclosure of all account-related fees to potential customers.

“The Truth in Savings Act is a simple law that helps consumers shop around,” PIRGer said. “But compliance with it is poor, harming consumers who cannot learn the truth.”

A 2008 report from the Government Accountability Office said that surveyors were unable to obtain complete fee schedules from 22 percent of bank branches. PIRG noted identical results in its 2011 report, though the group saw some improvement this year.

Among other findings in the report, only 48 percent of banks visited provided surveyors with fee schedules on the first request as required by law, though 72 percent complied after two or more requests.

Additionally, more than 12 percent of financial institutions never complied or refused to provide fee information, saying it was unavailable or telling surveyors to “go online.”

While some of America’s largest banks have tightened up free checking requirements, the service is still available at 59 percent of big banks with regular direct deposit.

“Big banks are doing what they always do—raise fees—but trying to blame regulation for it,” PIRGer said. “But free checking is still there for consumers who look for it, and there are lots of ways to avoid high bank fees.”

PIRG also made a number of recommendations to the Consumer Financial Protection Bureau, urging the federal watchdog to enforce the Truth in Savings Act and require that banks make fee schedules and disclosures searchable and accessible online.

“Banks will continue to ignore the Truth in Savings Act and other consumer laws until the CFPB tells them to do a better job,” Woodruff said. “Consumers do have more options than they think they do, but the CFPB can make it easier to shop around.”

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