About Ken Tumin

Ken Tumin founded the Bank Deals Blog in 2005 and has been passionately covering the best deposit deals ever since. He is frequently referenced by The New York Times, The Wall Street Journal, and other publications as a top expert, but he is first and foremost a fellow deal seeker and member of the wonderful community of savers that frequents DepositAccounts.

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Banks Not Meeting Truth in Savings Act Requirements


Many banks don't make it easy to learn about their account fees, and this was shown in a new study that was just released. The U.S. Public Interest Research Groups (PIRG) released the study titled Big Banks, Bigger Fees 2011: A National Survey of Bank Fees and Fee Disclosure Policies. Here's an excerpt of its findings:

PIRG staff visited 392 bank branches in 21 states to determine compliance with the Truth In Savings Act requirement that "prospective customers" have the right to "complete" fee schedules.

Fewer than half (38%) of branches complied easily with this legal request; nearly one quarter (23%) refused to comply at all. A total of only 55% provided correct information eventually, only after repeated requests for information.

What's suppose to be in a fee disclosure? Some of the fees required by the Truth in Savings Act include:

  • Maintenance fees, such as monthly service fees
  • Fees to open or to close an account
  • Fees related to deposits or withdrawals, such as fees for use of the institution's ATMs
  • Fees for special services, such as stop-payment fees, fees for balance inquiries or verification of deposits, fees associated with checks returned unpaid, and fees for regularly sending to consumers checks that otherwise would be held by the institution

The report included several amusing responses that the PIRG staff received in their bank visits. Here are a few of the best ones:

Georgia: This bank didn’t have one, the bank staff said, "I don't even have a list. Let me see if I can think of some for you off my head...."

Florida: They didn't give me the info until I listened to their whole spiel about different accounts.

New York: We don't USUALLY give these out.

The report mentioned that many banks told them to look online for the fee disclosures. Here's what the report said about that:

To test the hypothesis that many branch staff extolled, “look online for what you want,” we did. This month, when we looked online to verify the fee data obtained in person for the report, we found inadequate disclosures online. First, we found that many sites had no detailed online fee schedules. Some banks didn’t even list basic fees for accounts. Note that the Truth In Savings Act does not require online disclosures.

At the end of the report they included recommendations for consumers and for regulators.

Its recommendations for consumers were pretty basic. As you might expect it warned about interest checking. Even before our ultra-low interest rate environment, these interest checking accounts rarely paid enough interest to make the monthly fees and minimum balance requirements worthwhile.

Most of the report's recommendations for regulators were directed to the new Consumer Financial Protection Bureau (CFPB). One of the recommendations for this bureau makes sense and it should be able to get wide acceptance:

The CFPB should extend the requirements of the Truth in Savings Act of 1991 (Regulation DD) to the Internet. The law requires only paper disclosures provided in-person or by mail.

That would make it a lot easier for me and everyone here who reviews account details online. There was also the recommendation that the Truth in Savings Act require a simple tabular format for the "most important savings and checking account disclosures."

Credit unions and the NCUA were also mentioned. It's interesting to see what the report had to say about them:

Credit unions generally have fewer and lower fees than banks, but their account disclosures are even murkier than most bank disclosures. The NCUA should, with advice from the CFPB, issue model guidelines on fee disclosures and require credit unions to explain the basic terms of their accounts in a better way.

If regulators are going to pursue changes to the Truth and Savings Act, in my opinion, they need to also improve disclosure requirements for CDs so there's no longer any question about the size of the early withdrawal penalty, if an early withdrawal will be allowed and if the early withdrawal penalty will remain unchanged until maturity (see post).

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  |     |   Comment #1
Maybe that is why it is often so difficult to find the early withdrawal penalties on long term CDs.  Sometimes when you open a CD even with the disclosures that you are provided you don't find the early withdrawal penalty.  I wonder if it so that they can change the terms and conditions, midway.  This should be illegal.
  |     |   Comment #2
How can there be "Truth in Savings" when it comes to IRA's when form 5305-a or 5305-RA specifically states that a bank can changes the fees at any time by providing notice.   Effectively, they could just take back all the interest earned and then some.

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