More than 600,000 angry consumers switched banks

Feb 10 2012 - 1:53pm

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According to a study released last week, 610,000 U.S. consumers jilted their existing bank and hooked up with a new one between October and December, specifically citing "Bank Transfer Day" as their reason.
According to a study released last week, 610,000 U.S. consumers jilted their existing bank and hooked up with a new one between October and December, specifically citing "Bank Transfer Day" as their reason.

Three months ago, many bank customers were fuming. They didn't like big bank bailouts, and they didn't like the $5 debit card fees that Bank of America and other institutions were rolling out.

Across the country, consumer activists and Occupy Wall Street groups urged customers to dump their old bank and switch to a new one, presumably with fewer fees. Through blogs, billboards and bullhorns, Nov. 5 was officially designated as "Bank Transfer Day."

So what was the result?

According to a study released last week, 610,000 U.S. consumers jilted their existing bank and hooked up with a new one between October and December, specifically citing "Bank Transfer Day" as their reason.

That's roughly 11 percent of the 5.6 million people who switched banks overall during the three-month period, according to Javelin Strategy & Research in Pleasanton, Calif., which tracks the financial services industry.

"In some ways, it's an expression of populist anger at the banks. ... It's also because it's still a very difficult economy and (people) are trying to save money wherever they can," said Claes Bell, a Bankrate.com senior writer in Palm Beach, Fla.

Some left their bank for a credit union. Others opted for online banks or smaller, community banks.

Bank Transfer Day didn't produce the mass exodus of customers that many banks may have feared, said Javelin founder and president James Van Dyke.

But it was nonetheless significant. The number of "angry bank-switchers" leaving their bank was nearly triple those who walked out for similar reasons in 2010, Van Dyke said.

Those numbers were equally significant because switching banks these days isn't easy, given the online payments and direct deposits that tie customers to one institution.

Interestingly, he noted, there was no evidence that the typical bank-switcher was "a young, low-income hipster." Without supplying specifics, Van Dyke said the survey indicated that bank-switchers tended to be higher-income: "everyday Americans but perhaps with a slightly fatter wallet."

Customers at large, national banks should "keep an eye out" for new fee schedules in the mail or on their online statements, Bell said.

"We're going to see monthly fees gradually rise for checking accounts," he said.

In the past, checking account fees were often waived if a customer kept a minimum monthly account balance or signed up for direct deposit. But those options will be limited going forward. "The 'outs' will be harder to come by," Bell said.

As a result, consumers will need to be choosier when deciding what they need -- and what they want to pay for -- in banking services. Big banks, for instance, offer the convenience of huge networks of brick-and-mortar branches and ATMs. But as a consumer, "If you can get by without that, a small bank or a credit union might be a better option for you," Bell said.

Following BofA's "fee-asco," as some called it, big banks are doing "a lot of soul-searching" around fees, Van Dyke said. He predicts a shift "from punitive to proactive." Instead of focusing on overdraft fees or other punishments, he said, banks will move toward clearly stated fees for services that "protect you or save you in the long term."

For instance, he said, banks could offer fee-based identity-theft protection for your financial accounts. Or those running late with a mortgage or car payment could pay their bank a small fee for "expedited payments" in order to avoid a bigger late-payment penalty.

While new fees may be the downside of financial reform, the laws also give consumers a clearer view of what they're paying for bank services.

"We'll see a different world in the next decade ... where the individual has a more keen awareness of what goes on with their money," Van Dyke said.

But first, "You have to get rid of that notion that banking should always be free."

Contact Claudia Buck at cbuck@sacbee.com. For more stories visit scrippsnews.com)

 

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