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Banks' behavior improves, study finds

| Saturday, June 1, 2013, 12:01 a.m.

Banks are doing a better job of informing consumers about the costs associated with their checking accounts, but more regulation is needed to ensure that the terms are fair and transparent, according to a report issued by Pew Charitable Trusts.

Pew researchers examined checking accounts offered by 36 of the nation's biggest banks, including how effective they were in providing clear cost disclosures and reducing incidences of overdrafts in which consumers are charged a fee for spending more than they have in their accounts.

Ninety-seven percent of banks received high marks in at least one category, although none got a thumbs up across the board. Ally Bank received the highest marks, followed by Charles Schwab, First Republic Bank, Citibank and Bank of America. On the low end of the scale were First Tennessee Bank, Sovereign Bank, Union Bank, KeyBank and First Niagara Bank, which was among four with Pittsburgh-area branches included in the report.

Fifth Third Bank and PNC tended to receive higher marks than RBS Citizens Bank and First Niagara.

First Niagara got low marks for its dispute resolution practices and disclosure of fees and other account information. RBS Citizens was graded poorly for its overdraft practices but graded well for dispute resolutions.

None of the four banks received above-average marks for overdraft practices, such as debit card use or dollar thresholds that trigger overdrafts.

Fifth Third scored best for its disclosure practices, while PNC received its best marks for dispute resolutions.

“While a majority of the banks improved, there is still lots of room for improvement,” said Susan Weinstock, director of the Safe Checking Project at Pew. “The Consumer Financial Protection Bureau can take action in a number of ways to clear up some of these problems with overdraft.”

The study is the latest by the nonprofit organization to examine the transparency of checking accounts in the aftermath of the financial crisis. Banks became increasingly reliant on a variety of fees charged to consumers as the economy sputtered. Lawmakers and advocacy groups complained that some institutions were raising fees and pinching consumers while receiving taxpayer bailouts.

The backlash led to changes in the way banks handle overdrafts. Banks, for example, can no longer automatically cover an overdraft deficiency and charge a fee if the customer has not opted in to such a program.

The Washington Post and Trib Total Media staff writer Thomas Olson contributed to this report.

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