Customers, who have long since grown weary of exorbitant bank fees, are facing yet another series of fees by some banks. This time, it appears closing a checking account is going to cost. But are these fees actually realistic?
According to a new survey released by Consumers Union, consumers are fed up with the fees associated with closing their traditional bank accounts. Now, at least one policy and advocacy group is asking the government to redefine guidelines associated with closing bank accounts. They’re demanding new protection laws be put into place.
The Costs
The Consumers Group conducted its survey in order to examine various practices of the nation’s ten biggest banks. Those included JPMorgan Chase, Bank of America, Wells Fargo and Citibank, among others. What the survey found is that consumers often resisted closing an account simply because the fees and penalties to close it were too high. Here are a few of the findings:
Customers wishing to transfer money to another bank are charged on average up to $10 to do so if they opt for a certified check. Wire transfers can cost up to $30. None of the ten banks surveyed offered complimentary same-day electronic transfers, not even as a one time courtesy to the customer.
Banks are also charging fees for customers wishing to close their accounts within a specific time frame. For instance, Citibank charges a $25 fee to close an account within 90 days, while HSBC, PNC Bank and US Bank charge $25 to close an account that has been open for fewer than 180 days.
Zombie Accounts
Zombie accounts have also become problematic. Even when consumers close their accounts, if a direct deposit hits that account after it’s been closed, the bank will re-open it, forcing consumers to go through the process once again. That means maintenance fees and minimum balance fees apply, so consumers are then stuck with having to pay those and, unfortunately, the early closing fees if their bank institutes them. Often, consumers aren’t even alerted that the direct deposit triggered a re-opening and don’t realize the fees have added up until it shows up as a delinquent bank account on their credit reports.
Congress is now being urged to rethink the banking protection laws for consumers. To increase customer protection laws for bank patrons and enhance consumer choices, Consumers Group is calling on Congress and the Consumer Financial Protection Bureau (CFPB) to consider requiring banks to shoulder the responsibility for transferring those direct deposits into the new account within fourteen days.
Further, it wants banks to offer complimentary same day electronic fund transfers, reduce check “hold times” so that consumers are better able to access their accounts, no longer re-open an already-closed account (some are even saying it’s illegal and cite the Patriot Act) and finally, to provide clear and easy to access closing procedures for anyone choosing to close their bank accounts.
There is a flip side, however, there are considerations that must be taken into account. Banks shoulder the costs of opening new accounts and it’s not unreasonable to insist on a closing fee for those accounts that are still considered in their infancy. It’s just good economical sense.
Still, there are other fees that are clearly unreasonable, say some groups. The Consumers Group is also requesting regulators examine the feasibility of portable bank accounts to facilitate easier bank switching. These changes would amount to fairer practices for consumers everywhere, argues the group.
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