Magazine article American Banker

Savings Account Fees, Terms Vary Widely: Survey

Magazine article American Banker

Savings Account Fees, Terms Vary Widely: Survey

Article excerpt

Byline: Brian Browdie

Savings accounts represent a significant source of financial security for Americans, but some of the accounts are better for savers than others.

That is the finding of a survey released Monday by the Consumer Federation of America, which found that 49% families have a savings accounts with a median balance of $2,400. Among families who earn less than $36,000 annually, 37% have a savings account with a median balance of $800.

The accounts offer a ready source of funds that low- to middle-income Americans tap to repair cars, pay medical bills and handle unforeseen expenses, according to the CFA, which found the accounts vary widely by costs, rates, fees and incentives to save.

"Bank savings accounts remain the most useful way for most lower-income families to save for a rainy day, but some of these accounts are far more pro-consumer than others," Stephen Brobeck, the CFA's executive director and the study's author, told reporters.

The survey combined previously unpublished data from the Federal Reserve Board's survey of consumer finances and information gleaned this spring from the websites of the 50 banks with the largest number of branches, 100 medium-sized and small banks, and 10 of the largest credit unions.

The study also distinguished between savings or passbook accounts and money market accounts, which CFA said tend to be used by households with relatively high incomes.

Some findings "surprised" the CFA, Brobeck said. More than half (51%) of banks failed to divulge rates or yields on their websites, while 20% did not disclose the charge for failing to maintain a minimum monthly balance. Thirty-four percent of institutions had monthly minimums of at least $300, while 14% charged monthly minimums of $25 or less. Thirty-five percent of banks charged at least $5 a month to maintain a savings account, while 30% charged $2 or less. …

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