Chase Simplifies Consumer Checking Account Language
Chase is making its checking accounts easier to understand.
The bank said Thursday it will start providing a three-page disclosure to help consumers quickly identify the key terms of its basic checking account, such as the monthly fee and conditions customers need to meet to have that fee waived.
Chase, part of New York-based JPMorgan Chase , will be the first major bank to adopt a version of the consumer-friendly disclosure developed by The Pew Charitable Trusts earlier this year. As it stands, Pew says disclosures are often more than 100 pages and bury the most important fees and terms for customers.
The one-page model disclosure developed by Pew in April instead highlights the key terms of a checking account, including ATM withdrawal fees and overdraft policies.
The Pentagon Federal Credit Union and North Carolina State Employees' Credit Union adopted versions of the form in November. Chase said its three-page version of the form will be available online and in branches immediately.
When Chase tested earlier versions of its disclosure form, executives found customers were often confused by terms that have become commonplace in the industry, said Ryan McInerney, CEO of Chase's consumer banking unit.
"What surprised us most was that some of the words we tend to use just weren't clear to customers," McInerney said.
For example, the order in which a bank clears a customer's transactions is important because it can impact upon how many times the account incurs an overdraft fee in a given day. This process is often referred to as a "posting order" in the industry, but McInerney said that term was met with blank stares in focus groups.
Chase's disclosure form now explains the process in a section called, "How Deposits and Withdrawals Work."
The push for clearer disclosures comes at a time when banks have been revamping their checking accounts, in many cases by raising or introducing new fees. The newly created Consumer Financial Protection Bureau has also made it a priority to simplify the dense forms that accompany a variety of financial products.
Last week, the agency unveiled a simplified credit card agreement that it plans to test at the Pentagon Federal Credit Union. The agency is also working on improving mortgage disclosure forms as mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act. But it has not yet set its sights on checking accounts.
Pew, however, has asked the agency to require banks and credit unions to adopt a uniform disclosure for checking accounts.
"That way consumers can shop around for a checking account the way they shop around for a can of soup," said Susan Weinstock, director of Pew's Safe Banking Project. She noted that even as checking accounts become increasingly more complicated, they remain one of the most basic and widely used financial products.
Weinstock said several other regional banks and credit unions have signaled an interest in adopting versions of its disclosure in the coming year. But she said no other major banks have yet stepped forward.