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Banking institutions still using hidden charges, says report

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According to a new report, big banking institutions are still utilizing hidden charges to make up for earnings lost to regulatory efforts. Article Source: MatchFinancial

All kinds of hidden charges out there

The Pew Charitable Trusts report, released Wednesday, looked to the practices of 12 major banking institutions over the last 18 months. According to the report's findings, many banks are still misleading consumers and finding excuses to tag on additional costs.

The 12 banks studied in the report are B of A, Chase bank, Citibank, Wells Fargo, Capital One, Regions Bank, HSBC Bank USA, Branch Banking and Trust Business, TD Bank, PNC Bank, United States Bank and SunTrust Bank.

Still fees hidden in pages

There are hidden charges in the confusing language found in bank disclosures, though the average disclosure is only 69 pages this year instead of 111 last year.

It was also hard for consumers to find pertinent data since it was not on the site. To get a copy of it all, a consumer had to get a mailed document or go to a branch.

Charges on debit cards

A year ago, federal regulators capped the amount banking institutions are allowed to charge merchants for processing debit card transactions. As a result, Wells Fargo Bank, for instance, saw a 32 percent decline in revenue from debit card purchases year-over-year.

It is more expensive to keep deposits too since getting insurance from the Federal Deposit Insurance Commission costs more now.

Lenders, says Pew, then started applying more hidden charges to consumers to make up for the lost revue. Charges for ATM withdrawals and for overdraft protection was among the most common ways banking institutions tried to recoup losses on the backs of depositors.

Legal rights of a bank

Obama commented on it in an ABC News interview last year:

“You do not have some inherent right just to get a certain amount of profit if your customers are being mistreated."

Banks say that the fees they charge are sensible, but the Pew report concludes that many are unfairly charging consumers inflated charges to make up for the profits lost to regulations intended to make them more transparent.

Further legislation required

In order to keep banks from hurting consumers to get more cash, the CFPB is encouraged by the report to bring more legislation.

According to the report:

“An efficient market requires informed consumers who can make choices based on the product that best meets their needs. This is particularly important for an item as fundamental and significant as a checking account.”

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