Despite all the money spent on them, bank ads do not talk about what is really important to potential customers.
Sure, the ads say how friendly the bank is and specify interest rates, but they skip the fine print that can make or break a relationship.
For example, customers like to know how long it will take to approve a loan. We all know that a quick "no" is appreciated more than a slow "yes." If the approval process takes too long, customers may assume that an application has been rejected and look elsewhere. A quick turndown, however, can leave enough time to find credit somewhere else.
It would be highly useful if a bank's ad stated: "You will have our decision in three days."
Points on mortgages are another issue. Many people do not even know what points are until they sit down at the closing and are rudely shocked. Bank ads should state whether the bank charges points.
Service charges are rarely mentioned in ads. Some banks charge businesses 25 or 30 cents to deposit each check. This cost can add up for a business that gets many checks for small amounts.
Similarly, what are the monthly service fees? If a bank says that there are no service fees, are there catches? Is there a high minimum deposit requirement below which fees are assessed? Is there a humungous overdraft fee? How long after a deposit is made do the funds become available? Wouldn't an ad that explains this be useful?
Credit card charges are particularly infuriating to customers. Newhouse News Service recently published an article pointing out how banks have subtly raised credit card fees over time. Examples include:
- Eliminating the grace period on a late fee.
- Moving the payment deadline to the early morning so that checks arriving on the due date may still be late.
- Raising the interest and penalty rates permanently after one late payment.
- Charging new cardholders "activation," "account setup," and "acceptance" fees.
- Approving purchases over the credit limit and then charging an over-limit fee.
- Increasing the currency conversion fee for international purchases.
- Raising a customer's interest rate if a credit rating report shows any late payment, even if the customer has always paid credit card bills on time.
Then there are simple items that should be included in ads but are usually omitted: Where are the branches located, and when are they open?Some airlines used to run ads that showed simply how safe and convenient flying is. Most now have switched to much more informational ads that include prices for various round trips and in many instances how often flights leave for various cities. Potential flyers need this type of information. Bank customers need it even more.
Some states, notably New Jersey and Massachusetts, are now gathering and posting this type of detailed information. Their aim is to help the public understand how the terms of their bank relationship have changed after their bank is taken over.
But why shouldn't banks everywhere provide this information without governmental sponsorship? Ads that give solid information and warn of things like fees would be truly valuable for banks. They could help avert unpleasant confrontations later and help protect the bank's good name.
Do you agree or disagree with Paul Nadler? He'd like to hear from you. His e-mail address is bnadler14@aol.com.
Mr. Nadler, an American Banker contributing editor, is professor of finance at Rutgers University Graduate School of Management.
