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Senior discounts? With some checking accounts, it's a senior penalty

Senior citizens are used to getting good deals. Tell the truth: if you're aren't of AARP age, there have been times you wish you were -- when buying mass transit tickets, for example, or visiting America's national parks (one $10 fee gets you into any park, all year).  Plenty of restaurants and other retailers offer "senior days" and other deals.

But take checking accounts off the senior discount list. A new report by the Pew Center on the States warns(.pdf) that so-called senior checking accounts may not be a good deal at all. In fact, in some cases, senior accounts cost much more than a basic checking account.

At Bank of America, for instance, a senior account is far more expensive than a basic account. Here are the facts, from Bank of America's website.  The bank's “Advantage for Seniors” account costs $25 per month vs. a basic checking account fee of $14 per month. In both cases, consumers can earn a fee waiver, but here again, the senior account comes up short. Direct deposit of paychecks is one way, but that's often not available to seniors, Pew points out in its report. Basic checking users can also avoid fees by maintaining a $1,500 balance in their account; but seniors have to keep at least $5,000 in their account. Fall below $5,000 for even one day, and that's a $25 fee.

"If you have $5,000, and are happy to have it sit in this account, this can be a fine deal," said Susan Weinstock, director of Pew's Safe Checking Project. "But the question is: Is the consumer in an account that best suits their needs? The point of this (research) is that consumers need to understand the terms of their accounts."

Seniors who could comfortably park $2,000 or $3,000 -- but not more – in their checking accounts would save $300 apiece annually by steering clear of the senior account at Bank of America. And those with balances below $1,500 would still save $132 by picking a standard, basic account instead of the senior account.

The Advantage for Seniors account does offer a few perks, such as fee-free mini-statements from ATMs (they normally cost $1), but Pew concludes in its report that such perks aren’t worth the extra fees.

"Essentially, accounts of this type are a luxury account tailored for seniors, not necessarily an improvement on the basic checking package," Pew concluded.

Bank of America spokeswoman Betty Riess said that seniors have a variety of low-cost choices at  Bank of America, including its MyAccess product, which provides a fee waiver with any monthly direct deposit of $250 or more, including Social Security payments.

“The Advantage interest-bearing account is designed for customers who have higher balances with us, and the vast majority of seniors in that account do not pay a monthly maintenance fee on the account,” she said.  She added that the Advantage account offers one benefit that is quite handy for seniors – an early CD withdrawal without a penalty.

Senior accounts at other banks also offer some tricky choices, but not quite as tricky. At TD Bank, the "60 Plus" account costs $10 monthly(.pdf), more than the $3.99 basic checking account costs, the report found. But it only takes a $250 balance to earn a fee waiver in the TD senior account, a much more manageable threshold.

At BB&T, senior accounts cost $8 per month, and a $1,000 balance earns a fee waiver, a genuine discount compared to the $10 per month the firm charges for its basic "BB&T Bright Banking" account, which requires $1,500 for a fee waiver.

Of course, if your eyes have begun to glaze over at these various numbers, then you've heard the main lesson of the Pew report -- it's not easy to pick the right checking account under even the best of circumstances.  Add in a new set of variables, such as those associated with senior accounts, and you’ve got even more confusion. But seniors aren’t the only ones struggling with specialized checking account questions. A related Pew report released the same day looked at student/college checking accounts and found similar problems; some student accounts are inferior to basic accounts, and comparison shopping can be a real challenge.

"We looked at all these disclosures from banks, and 69 pages was the median length," Weinstock said.  "We're worried this is confusing for people ... for students, for seniors."

Pew is trying to get banks to adopt a simple disclosure format -- similar to nutrition labels on food items -- so consumers could more easily comparison shop and pick the account that's best for them.

Already, TD Bank, Chase and Citibank (since July 17) have voluntarily adopted Pew's fee box, she said. The nonprofit research group also is urging the new Consumer Financial Protection Bureau to make fee disclosure boxes mandatory.

“It would have the same effect as a nutrition label,” she said. “But until we get that kind of transparency ... it will be hard to make the right choice.”

An earlier version of this story incorrectly identified the author of Pew's report.  NBC News regrets the error.

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