Overview

Bank accounts are an essential financial product, used by 9 in 10 American households, and need to be safe and transparent. Account agreements and fee schedules provide customers with account costs, terms, and conditions. Among the largest U.S. banks, however, the median length of checking account disclosure documents is 40 pages, and the information is presented in varied formats with inconsistent wording, making it difficult for consumers to easily find the information they need to comparison shop, avoid overdraft and other fees, and manage their money.

To increase the transparency of checking accounts, The Pew Charitable Trusts developed a model summary disclosure box, similar to a nutrition label for food, that provides clear and concise information about fees, terms, and conditions. The 12 largest banks, which together hold more than half of U.S. deposit volume, and the three largest credit unions have adopted a similar summary box that meets Pew’s criteria for effective disclosure, but the required information is not consistently formatted. Unlike nutrition labels mandated by the Food and Drug Administration, however, the adopted boxes are not easy to compare because no rules require clear, concise, and uniform disclosures for checking accounts. As a result, consumers may still struggle to compare accounts and determine which would best meet their needs.

This brief summarizes the results of a Pew-commissioned experiment that tested the effect of uniform versus dissimilar disclosure formats on participants’ ability to compare accounts. Half of the nationally representative sample of adults viewed summary boxes that were uniformly formatted and worded, and the other half received disclosure forms with differing layouts and language.

The experiment found that uniform disclosures:

• Made it easier for participants to compare account terms and conditions.
• Increased participants’ confidence in their understanding of practices and fees.
• Decreased the time users needed to identify account information.
• Increased participants’ understanding of account fees and practices.

These findings demonstrate the benefit of uniform disclosure for consumers and align with previous Pew research showing that 78 percent of checking account holders say that requiring banks to provide a one-page summary of key information about their accounts’ terms, conditions, and fees would be an improvement. Accordingly, Pew urges the Consumer Financial Protection Bureau to mandate clear, concise, and uniform disclosures for checking accounts—as it has proposed for general purpose reloadable prepaid cards.