Consumer Watchdog Takes Steps to Improve Checking Account Access, Fairness
America’s consumer watchdog is urging big banks to make checking account access easier and more consumer-friendly for more people.
The Consumer Financial Protection Bureau (CFPB) sent a letter to the 25 largest retail banks encouraging them to make available and widely market lower-risk deposit accounts that help consumers avoid overdrafting.
Banks May Use Inaccurate Information to Deny Applicants
CFPB is also concerned that the reports banks and credit unions rely on to approve (or not approve) checking account applicants may contain flawed information.
As more banks introduced automated overdraft programs, they have placed greater emphasis on screening new applicants for potential risks that may arise if a consumer exceeds his or her account balance.
One way they for risk is to use information provided by checking account reporting companies, which CFPB said have databases of information on involuntary closures of consumer checking accounts supplied by banks and credit unions.
In October 2014, the CFPB laid out concerns about the information accuracy of these reports, people’s ability to access the reports and dispute incorrect information, and the ways in which the reports were being used.
Wait for Banks to Clean Up Their Acts, or Join a Credit Union
While CFPB is right to point out these concerns, it should be noted that America’s credit unions usually bend over backwards to ensure they offer the fairest checking account options to the communities they serve.
Looking across the board, CUs usually have easier requirements for opening a checking accounts than commercial banks do. For instance, many CUs have no minimum deposit requirement for opening an account, while others have requirements that are extremely reasonable – and attainable for most people.
While banks were being excoriated in the media for engaging in predatory profit-boosting schemes to automatically add high-interest and/or high fee overdraft protection to accounts, credit unions served members by maintaining clear communication about account policies – and offering some of the lowest overdraft fees available.
CFPB would be doing consumers a favor by advising them to seek out a credit union for their banking needs.
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