Bank Fee Backlash Cost Big Financial Institutions More Than 2 Million Customers

×
Bank feesNobody likes to leave their bank. Apart from the hassle of setting up a new account, switching your direct deposit, re-entering all of your automatic bill payment information, and getting used to a new network of ATMs, there's the fact that banks are supposed to be our partners.

That's how they advertise themselves, after all -- as the steady friends who hold our money, gently push us towards our dreams, and even pay us a little bit of interest for hanging around. Looked at from this perspective, leaving a bank isn't a spur-of-the-moment decision like switching from Pepsi to Coke or McDonald's to Wendy's: It's more like breaking up with your friendly-but-slightly-abusive girlfriend.

The emotional roller coaster aside, thousands of people switch banks every day, for a host of reasons: better interest rates, easier access to their money, or because they're leaving one town and moving to another. Last fall, however, an estimated 610,000 people dumped their significant bankers for a very specific reason -- to protest steep bank fees.



According to a recent study by Javelin Strategy and Research, 11% of the 5.6 million people who switched banks over the last three months did so as part of "Bank Transfer Day," an event inspired by Bank of America's (BAC) decision to begin charging its customers $5 per month to use their debit cards for purchases. BofA ended up scrapping the plan, but it, and many other banks, added a variety of other fees. In fact, as a 2011 Pew study showed, the average bank account has 49 fees, many of which -- like the confusing "'Staff Assisted Requests for Any Item or Statement Copy' fee, the 'Foreign Check Clearing Services for up to US $5,000 Drawn from Canadian Banks' fee, the 'Online External Transfer to Your Accounts at Other Financial Institutions' fee and the 'Large Amount of Coins Deposited' fee" -- charge for services that used to be free.

(Full disclosure: The author recently discovered a new $25 monthly fee that his bank is now charging him because his balance is below $15,000. This fee was added late in 2011, and was not part of the original banking agreement. The author is currently trying to get his money back, is exploring other banking options, and is attempting to remain unbiased in his discussion of the greedy, soul-sucking clever, fee-adding folk who run many of America's largest financial institutions.)

On the one hand, Bank Transfer Day was hardly the overwhelming consumer uprising that big banks might have feared and activists had hoped for. More than 218 million Americans have some form of bank account, so in the grand scheme of things, the transfer tidal wave of 610,000 was more like a trickle. Even so, many banks -- including Citigroup (C) and Bank of America -- managed to give themselves PR black eyes as they called in security guards and police officers to keep protesters from withdrawing their money. Predictably, videos of these skirmishes found their way online, vignettes that are eerily reminiscent of the bank run scene from Mary Poppins.

But while the number of customers who were able to move their money on Bank Transfer Day itself was relatively small, many others have joined them over the following months. As Javelin reports, a further 26% of people who switched banks during the last 90 days -- about 1,456,000 customers -- also cited new bank fees as the reason for their moves.

This pattern of a slow diaspora from big banks dovetails with the demographic data that Javelin collected. Judging by the videos of Bank Transfer Day skirmishes, one might assume that the bank exodus of 2011 was largely composed of wild-eyed radicals -- or, as one Javelin researcher reported, "young, low-income hipsters." Not so: According to Javelin, people who switched banks "trended toward higher incomes." As these higher-wealth, generally older consumers continue to consider their banking options, it seems likely that America's largest banks are going to continue hemorrhaging customers.

Bruce Watson is a senior features writer for DailyFinance. You can reach him by e-mail at bruce.watson@teamaol.com, or follow him on Twitter at @bruce1971.

Increase your money and finance knowledge from home

Getting out of debt

Everyone hates debt. Get out of it.

View Course »

How to Avoid Financial Scams

Avoid getting duped by financial scams.

View Course »

Add a Comment

*0 / 3000 Character Maximum

99 Comments

Filter by:
n1yearocrapleft

keep protesting n rioting in america n bust store front windows n burn cars n keep burning the american flag untill this muslim clown is removed from our white house in handcuffs. ! !

February 09 2012 at 8:32 AM Report abuse +1 rate up rate down Reply
polarindy

Look's like they may have to do it all over again. My bank, (Twin City Federal, TCF) is slowly nitpicking now. Things that were free years ago, when I signed up, are now costly. Instead of just stopping the small things they do, and not charging, they just charge, until you put a stop to it. Put a stop to it, by changing your program. I am now on the first step, of eliminating that bank. I will gladly go to another, that does not have all those B.S. charges.

February 09 2012 at 8:05 AM Report abuse rate up rate down Reply
Kenny

MOVE it to small local banks or credit unions............... everyone let's all help stop the BS

February 09 2012 at 2:58 AM Report abuse rate up rate down Reply
knighti8

most of you who believe Obama is to blame in part you are right he did not act as fast as he should have coming into office however lets look at the previous 8 years of the LARGEST spending increase of the ENTIRE US HISTORY. GWB's plan was to just spend and spend till there was no money left so they (the republicans) can say look were spending to much its your fault we need to cut every Social Benefit possible... its called starving the beast by using up all the resources. By the way also the recession is in large part due to the greed we as a country have.

February 08 2012 at 11:07 PM Report abuse -3 rate up rate down Reply
njlynn2

I hope the Banks are feeling it, they did it to themselves.

February 08 2012 at 11:06 PM Report abuse +6 rate up rate down Reply
1 reply to njlynn2's comment
Juanita Posey

but they also did it to all the persons who had savings and C/D or IRA type accounts...that is the way we elders were able to hang onto a few dollars we saved out of salaries and bought investments with...now those are being depleted monthly by teh Banks who sold us the idea of getting rich on investing with them.Ha.

February 10 2012 at 1:39 PM Report abuse rate up rate down Reply
Vince

The morons in Baton Rouge came up with the idea that if you have a state income tax refund you dont get a check or direct deposit. You get a CHASE Bank debit card. My question is how much of my tax information does Chase get to view.

February 08 2012 at 9:26 PM Report abuse rate up rate down Reply
n1yearocrapleft

this incompetent muslim clown has the whole country farked up. ! ~~16.5 unemployment rate for the last 3 *plus* years~~WHAT A FARKIN DISGRACE. !

February 08 2012 at 9:23 PM Report abuse +1 rate up rate down Reply
1 reply to n1yearocrapleft's comment
Juanita Posey

shame on you...do you realize how many Americans voted for OUR PRESENT PRESIDENT? MORE than you see to realize ..could all of us be as fruitie as you now declare Our hard working President has become? I doubt you realize what you are saying> Juanita

February 10 2012 at 1:41 PM Report abuse rate up rate down Reply
nathanchattn31

Well i have to say i moved my checking and Savings to a local bank in our town.. i was nervous at first, but now im 4 months later im happy!

February 08 2012 at 8:48 PM Report abuse +4 rate up rate down Reply
1 reply to nathanchattn31's comment
Juanita Posey

Happy for getting a ...ooo.o5 percent interest? how foolish you sound Juanita

February 10 2012 at 1:43 PM Report abuse rate up rate down Reply
Alan

The biggest ripoff by far is a result of the little turd whho wrote the program that tells the bank when your account is getting low so they can pounce and charge $35 a pop for the "pending payments" They sit on payments for days at a time til the account gets a little low between paydays for instance then charge a hefty fee for each one. EVEN THOUGH the money has already been taken out of your account. It's almost like writing a check that the party doesn't cash for weeks til there's not enough to cover it. Only multiply it by 5 or f0. Bankers are thieves

February 08 2012 at 8:32 PM Report abuse +1 rate up rate down Reply
esb617

Stop putting your money in Bank Of Amercia

February 08 2012 at 8:18 PM Report abuse +4 rate up rate down Reply