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2 posts categorized "June 2012"

June 13, 2012

Disclosures via Twitter - Making It Small and Simple


by Ron Daly 

What if you tweeted your checking account disclosures? 

Think about it - instead of a big document with a lot of confusing language, what if you boiled it all down to five or six tweets? For example: 

@CUWhatever: @newmember Hi, here's your disclosure info...

@CUWhatever: @newmember Overdraft fees are $15. You get charged those fees if you go over balance and we spot you the money. You can only overdraft 4x.

@CUWhatever: @newmember If you have a savings/signature L.o.C. set up, we can withdraw money there to cover a balance shortfall. That will cost you $5.

@CUWhatever: @newmember Your account has no min. balance fee. You also don't pay a monthly fee, as long as you do 3 debit swipes/mo. (fewer than 3 = $10)

@CUWhatever: @newmember Okay, you're all set! Go to our website ($cuwev) or call us at 800 555 555 for further details. Kthxbye!

Each of those statements is less than 140 characters, and that includes the characters in that member's user name. See how easy that is?

Twitter vs. Reality

Yes, I know, the thought of tweeting someone's checking account disclosure is silly. What's sillier? Needing 53 pages to get it done. From this article in the New York Times' "Bucks Blog"

The report from the Safe Checking in the Electronic Age project, part of the Pew Charitable Trusts, found that the median length of a checking disclosure among the largest credit unions (ranked by deposits) is 31 pages, less than half the length of the median disclosure at big banks. The range of disclosure length for credit unions was nine to 53 pages...

Wowzers. And how about those fees? You know, the talking point in just about every "banks vs. CUs" argument? Are we really charging fewer fees at less cost, or are we just not saying what we should be saying?

Susan Weinstock, director of the Safe Checking project, said that problem could be remedied by adoption of uniform disclosures. Pew advocates adoption of a simple box, or form, with basic information. (Some institutions, like the Eastman Credit Union, have already done so). “It reinforces the need for a disclosure box,” she said. “Sometimes they don’t disclose a fee, but is it because they don’t charge it? Or because they haven’t disclosed it?” 

The median overdraft fee for credit unions is $25, the report found, compared with $35 for big banks.

Emphasis mine. I believe CUs should strive to be like Eastman, mentioned above, and provide the smallest, easiest-to-read disclosure info they can manage. If not for transparency, then at LEAST for cost. As someone who spends a lot of time worrying about the cost of bulky, barely-read paper documents, I see a 53-page disclosure agreement and my jaw hits the floor. 

Sometimes, you can't knock it out in a page...but it also shouldn't take a phone book. 

Let me hear your thoughts in the comments section. 


June 06, 2012

My Crazy Ex-Bank: What Some FIs Are Doing to Keep You from Leaving


by Ron Daly 

We all know someone with a "crazy ex" story. Some people just don't handle breakups well and they end up taking it out on the other person. Hopefully, you've never run into a crazy ex yourself...but you might wind up with one if you try and move your money from a big bank to a credit union. 

The "big guys" are going out of their way to "maximize breakage", as Seth Godin says. Some of them are charging big fees for closing an account you've had less than six months. Some of them are making it expensive to do an EFT or a wire transfer. Most of them are making the process itself hard to understand. From the article above:

Consumers Union also found that the account disclosures and websites for all of the banks surveyed failed to provide consumers with clear account closing policies. In the fall of 2011, the consumer advocacy group said it sent 16 secret shoppers to the banks’ branches to ask how to close an account. Some shoppers received conflicting information on how to do so.

I'll bet they did. 

Are the big banks really crazy? No. They know that if a process is difficult enough, you'll give up trying. If you can't close an account easily online, you'll go to the branch. If the process keeps you at the branch longer than a few minutes, you'll get antsy and leave. Either you'll break down and quit or you'll pay the fee to leave - if you feel strongly enough about the latter, you'll pay not to do the former. 

Continue reading "My Crazy Ex-Bank: What Some FIs Are Doing to Keep You from Leaving" »