Americans in the dark over bank fees
Banks and regulators are not doing enough to warn customers about the billions in fees they pay annually, according to a government report.
NEW YORK (CNNMoney.com) -- When you fork over $36 billion, you should know exactly what you're paying for.
But a government report on bank fees released Monday revealed that consumers are ill-informed about the fees they are paying on their checking and savings accounts.
The report, published by the Government Accountability Office, found that some fees assessed by financial institutions have steadily increased in recent years - in some cases by double digits.
Overdraft fees, for example, rose 11% between 2000 and 2007, according to the study. Other charges, like monthly maintenance fees, have declined in recent years.
All told, consumers paid more than $36 billion in various fees at banks, thrifts and credit unions in 2006, the GAO said.
But getting information about the fees proved difficult, according to the report.
As part of its study, the GAO had staff members pose as customers looking to obtain fee information at 185 branches of more than 150 different financial institutions. The GAO customers could not obtain detailed fee information, as well as account terms and conditions at more than one fifth of the branches visited.
And that proved even more difficult online, as GAO researchers were unable to locate that same information on half of the financial institutions' Web sites.
Under federal law, banks are required to disclose fee information for consumers.
Even though the report suggested that the financial institutions themselves were part of the problem, it urged federal regulators to do a better job making sure consumers can get information they need.
Rep. Carolyn Maloney, D-N.Y., who requested the report and has introduced legislation to crack down on abusive overdraft bank fees, called the findings of the report "troubling."
"You don't have to buy a car before you find out how many miles per gallon it gets, and you don't have to buy a house before you find out what your taxes will be. Why should consumers be forced to walk blindly into the terms and conditions of a bank account?" Maloney said in a statement.
Calls to the industry group American Bankers Association seeking comment on the report were not immediately.
Fees, which are typically considered a cornerstone of a bank's business, have steadily increased in recent years to not only cover the cost of doing business but to prepare for tough times like the current economic cycle.
However, some financial institutions have been quietly ratcheting up fees lately to compensate for business lost as a result of the credit crisis.
You can download the report here. http://www.gao.gov/new.items/d08281.pdf