Automatic Savings-to-Checking Transfer Service

GAO fulfilled a request for information regarding the advantages to bank depositors of automatic savings-to-checking transfer service and negotiable orders-of-withdrawal plans by analyzing the plans of banks in six cities and using nine simulated depositors to measure comparative benefits.

Depositors should consider minimum balance requirements in available plans before deciding whether to use a transfer service or continue with a conventional account program, but the current advertised and other information available from banking institutions is inadequate in shaping that decision. Generally, for all but the lowest income depositors, savings-to-checking transfer plans are preferable to standard checking or savings accounts, and flat fees are usually more advantageous than fees calculated with many variables. Since service charge structures are confusing, most depositors would probably have difficulty selecting the best plan for their circumstances. The necessary information includes the method of compounding interest, the calculation of minimum interest, charges for accounts falling below the minimum balance, and the effect of monthly checking patterns on service charges.