As Customers Flee, Big Banks Don't Seem to Care

Leigh Lumley, 74, opened his checking account at Bank of America (BAC) in 1978. On Thursday, he closed it. The retired insurance salesman who lives Salem, Ore., moved his banking business to nearby SELCO Community Credit Union.

"It's an economic thing," he says about not wanting to add a $60 annual debit-card fee on top of his $12-per-month checking account cost. "I give my regrets to them."

Credit unions, mid-size banks and online institutions are eagerly stepping up to capture banking customers who are fed up with increasing fees at the biggest banks. And so far, it seems, those big banks don't mind losing their business.

Ron Shevlin, a senior retail bank analyst with the Aite Group, says that losing a small percentage customers may not even matter too much for the biggest banks. The recent rush that some of the largest credit unions are experiencing, including a boom in account openings at the Navy Federal Credit Union and BECU, represents an extremely small fraction of the biggest banks' customer base.

"[Big banks] are really trying to cull the bottom of their barrel," Shevlin says. "They are looking at their customer base and have to find ways of making it more profitable."

Even as as the biggest national banks shift increasingly into a pay-to-play model, regional banks and credit unions -- by design or coincidence -- are gearing up to absorb the fleeing customers. New promotions and products are creating competitive incentives for bank switchers, and could offer some good values to customers looking for more rewards, no fees and high-yield checking accounts.

Smaller Institutions, Bigger Incentives


EverBank, headquartered in Jacksonville, Fla., is offering $60 cash to bank switchers who open a high-yield checking account with them by the end of November. That the incentive amount is the same as what Bank of America is charging for annual debit card use is coincidental, says Frank Trotter, president of EverBank Direct.

Meanwhile, the Randolph Brooks Federal Credit Union is offering to pay customers 15 cents back on every debit card purchase. Bethpage Federal Credit Union in Long Island, N.Y., is offering free-for-life accounts to new customers who open a Bethpage Bonus checking account. Cleveland-based Key Bank rolled out its Key Rewards Program in late September, which gives rewards to customers for doing things like direct deposit or using ATMs for banking.

"The timing is very fortunate for us," says David Bowen, Key Bank's director of consumer products.

Meanwhile, it is hard to miss Capital One's (COF) campaign for it's new "5x" High-Yield Checking Account, which was launched in September.

With its catchy celebrity ads starring Jerry Stiller, the bank is making an aggressive push to grab upwardly mobile customers who can afford to carry a $5,000 monthly balance. While the campaign is part of a longer term growth strategy, the timing of it underscores a sentiment prevalent in the consumer outcry: Checking accounts should be working for you, not charging you.

Sexy marketing like "five times the national interest rate" might be ear-catching, but in reality, the national interest rate is pretty low, and five times that is not an extraordinary return. And expanding a basic checking account at a bank that offers rewards for online banking and direct deposits could leave you hooked in deeper than you'd have planned.

But for a banking customer like Lumley, no extra bells and whistles were wanted -- or needed -- to make the switch. He just wanted a plain, simple checking account that aligned with his personal finances and affordability.

"The people in Charlotte are going to lose a lot business," he says. "They don't understand the ramifications in the board room."

Catherine New can be reached at catherine.new@huffingtonpost.com.

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Mike

Banksters can just go to the fed govt or fed res and fk every one they want, why should they care? This IS why federalism is destroyed and bought and owned by banksters. Time to end the theivery and end federalism! My state govt can govern just fine and for a whole lot less expense!

December 26 2011 at 2:14 PM Report abuse rate up rate down Reply
Denis

I am really surprised at Wells Fargo. They have made it a point to let me know how much they appreciate my business. When I lost my ATM card recently and had to get a new one they bent over backwards to help me, and a customer service rep even called me at home to make sure I was happy with everything. You could have knocked me over with a feather.

October 26 2011 at 8:18 AM Report abuse rate up rate down Reply
1 reply to Denis's comment
Mike

WF are theives!

December 26 2011 at 2:14 PM Report abuse rate up rate down Reply
Ike Reeves

Let's all tell our rich uncles to move their money.
Then let's see if the banks care.

October 26 2011 at 7:43 AM Report abuse rate up rate down Reply
Ike Reeves

You can't convince me that B of A isn't scared.
Noticed all the sappy, grinning B of A ads lately? They don't spend money like that for fun. t's definitely damage control.
Maybe they believe they're culling the herd, but many large depositors will join the exodus in sympathy.
Move your money! Do it a few times-- like OWS, if big banks can't predict a pattern it will scare the hell out of them.
Let them and the bank officers feel a bit of the insecurity felt by Americans under their watch! Let's see how it feels when THEIR source of income becomes unreliable!

October 26 2011 at 7:35 AM Report abuse rate up rate down Reply
doc4fitness

What none of these posts do is get to the root of the original problem: Carter's policy from 1978 that led to subprime mortgage market. FANNIE and FREDDIE to prop the risky mortgages up, courtesy of Clinton, Dodd, and Frank. I agree Bush pushed things along, he wanted a strong housing market. But the original problem goes back to 70s and early 90s, when Dems held House, Senate, and President. Without subprime mortgages due to social engineering policies, we never would have had those products.

October 26 2011 at 6:50 AM Report abuse rate up rate down Reply
Robert

Big banks don't care because they make their money with the help of thier crooked partners the Federal Reserve. They borrow what they want from the FEDs at no interest and buy US Treasuries. So if they can't get you coming in the front door they get you at the back door vis interest from the taxpayers from the treasuries.

October 26 2011 at 5:23 AM Report abuse rate up rate down Reply
ccurt78

Move you banking to a credit union or better yet a local regional bank. I have used regional banks for years and have always been pleased, the big plus is they know you as a person. Nothing changes unless we change it !
Buy Amercian products, commit to voting out republicans/ tea partiers who only promise More of the same BS that created this mess. 999,20 20 20 both amount to a big tax break for the upper class and business and a major tax increase for the middle class, the poor and retired people.

October 26 2011 at 4:38 AM Report abuse -1 rate up rate down Reply
Paul

They cater more to the big companys

October 26 2011 at 1:49 AM Report abuse rate up rate down Reply
bcheerful3

I don't know if I agree that banks like BOA don't care. Their managers do everything but tackle people withdrawing cash on debit cards issued by SUI. Who in their right mind would bank w/ a company that was so insturmental in bringing the loss of jobs that make use of those SUI debit cards necessary? Did the states cut a deal w/ BOE to issue SUI monies so that BOA could shake potential customers down? I dunno....... just saying.

October 26 2011 at 1:34 AM Report abuse -1 rate up rate down Reply
tomgold125

First thing we've got to do is get rid of the marxist we've got in the white house!

October 25 2011 at 11:37 PM Report abuse -1 rate up rate down Reply
1 reply to tomgold125's comment
bcheerful3

Oh sure and we will vote in a Republicrat and everything will be just hunky dory like the hole that was dug for eight years prior.

October 26 2011 at 1:35 AM Report abuse +2 rate up rate down Reply
1 reply to bcheerful3's comment
rolando4rocks

RIGHT ON!!

October 26 2011 at 4:47 AM Report abuse +1 rate up rate down