Survey Says: Customers Dumping Big Banks Was All The Rage Last Year

Did you dump your big bank last year? You weren’t alone — a new survey says plenty of your fellow consumers were unhappy with new fees and shoddy customer service, leading them to break up with large financial institutions in favor of smaller banks and credit unions.

Customers fled at a defection rate of between 10% and 11.3% at large, regional and midsized banks, according to a new survey by J.D. Power and Associates. CNNMoney says the survey looked at 5,000 customers who were eyeing a new bank or account in the last year.

Smaller banks and credit unions only saw 0.9% of their customers walk out the door on average, which is a pretty significant difference from the 8.8% rate of customer loss they had in 2010. They also scooped up the business of newly disillusioned, angry customers fleeing from big banks.

The arrival of tithes for checking and other fees at big banks last year turned off about a third of customers who ended up going elsewhere.

“When banks announce the implementation of new fees, public reaction can be quite volatile and result in customers voting with their feet,” said Michael Beird, director of the banking services practice at J.D. Power and Associates.

Bank of America’s decision to charge a monthly fee for using a debit card is one large, glaring example of a whopping mistake. They eventually took back the fee, but the damage was done, spurring consumers to band together and create “Bank Transfer Day.”

More customers leaving big banks [CNNMoney]


Edit Your Comment

  1. Loias supports harsher punishments against corporations says:

    I really need to get off my ass and dump WF as I don’t want to be part of their binding-arbitration.

  2. scoutermac says:

    I’ve been considering switching to a Credit Union. So how does the hole ATM Alliance work? Is it really free to use other Credit Unions ATMs for deposits and withdraws?

    • Cat says:

      Yes, it is free. And Seven – Eleven stores ATMs are free, too, for most credit unions.

      In fact, you can walk into any credit union that’s a member and transact most of your CU business with a teller, too.

    • dpeters11 says:

      And most have a list of other ATMs that are free that are not owned by a CU. We don’t have 7/11s, but I can use ATMs at some banks with no fee if there are no convenient Credit Unions.

    • Cor Aquilonis says:

      Check you CU’s terms. I have an account at a local bank, and I have ATM alliance. All my non-local-bank ATM fees are reimbursed if I meet my accounts monthly requirements (and I always do.) My requirements are:

      1) At least 30 transactions per month.
      2) At least 2(?) auto-drafts per month.
      3) Valid email for statement notice delivery.

      I love it because I always meet the requirements without any effort. Also, I have no fees (whether or not I meet the requirements) and I get interest at 3%. It’s pretty awesome.

    • longfeltwant says:

      I am a credit union customer too, but my primary account is with USAA, which refunds 100% of ATM fees. In general I prefer CUs because they are not banks, but USAA is the CU of banks. Good luck.

      • scoutermac says:

        The Credit Union I am looking at does online check deposits. However sometimes I have cash to deposit and they are further away then other banks and Credit Unions are from me. I just need easy access to a Bank or ATM to make deposits and occasionally withdraw.

    • vorpalette says:

      My CU doesn’t have any sort of transaction limits, and we can use something like 500 ATMs in the area (there are only branches of my CU)–they’ll supply you a list if you ask for one. We can also use 5/3 ATMs for free.

      • scoutermac says:

        I currently have Fifth Third Bank. The only reason I have stuck with them this long is because they have so many convent locations here in Indiana.

        • vorpalette says:

          My fiance uses 5/3 and has never had problems with them. We’ll keep his accounts there after we’re married, but we’re still deciding whether we want our joint account there or at my CU.

    • gerald.saul says:

      My CU is connected with the Allpoint network, so anytime I see that symbol on the machine, I know it’s free. I also have an Allpoint app on my Android phone, so I always know where the closest ATM is. When my wife and I travel, we check ahead to make sure we can get cash if we need it. Haven’t had a problem, yet.

      But, just like choosing a bank, do your research. Compare fee schedules and the various account types they offer. Stop by on a Friday afternoon and see how busy they are and if they suit your needs.

      • EarlNowak says:

        Yep, Allpoint is a life saver. Most drugstores ATMs are allpoint (CVS/Walgreens/Rite Aid), even if they have a bank brand on them! The Chase ATMs at Walgreens around here are all allpoint, even if the Chase ATMs at banks aren’t.

  3. frank64 says:

    They could be making more on the higher fees than the cost of the churn.

    I never understood why we all took the big bank fees and treatment for so long. I think you have to blame consumers here for letting them do it.

    • ARP says:

      That’s a big element of it. It’s also that the industry sometimes moves as a monolithic market; there isn’t time to react to changes. So, if Bank A institutes binding arbitration, by the time there’s any market reaction to it (even if it is small), four more banks have instituted it and it’s now “market,” making it much more difficult to escape.

    • longfeltwant says:

      Maybe, but I’m not usually the kind of person to blame the victim, even when the victim continues to take abuse.

      There is a theory in economics that people are rational actors who make decisions in their own best interests. That theory leads to conclusions such as free-market policy and libertarianism, both of which would make sense if the theory were right, but it’s not, it’s wrong. Humans are not (for the most part) rational actors and do not (in most cases) make decisions in their own best interests. Obviously we are somewhat rational, and make somewhat good decisions, but it is wrong to say that we are absolutely rational and absolutely make good decisions.

      Since customers need some help from producers choosing products, it is partially incumbent on producers to Do The Right Thing. Even though they try to shirk that responsibility, we help them remember with appropriate legislation. Hence banking regulations.

      All that said, I dropped Bank of Assholes way back in 2003 because of some fee which made me mad. But, you know, I’m the rare person who is perfect in every way, including perfectly rational. ;-)

  4. Torchwood says:

    Sometimes, bigger just isn’t better, it just creates more bureaucratic red tape. I’m really glad I went with a good local credit union back in 2006.

    As I explain to my friends, my beef with the megabanks of America has to do with the decisions made by the upper management. It does not extend to the lower ranks who simply have to follow the policy and decisions made by upper management.

  5. dolemite says:

    Hey, if enough people leave, maybe they won’t be “too big to fail”.

    • ARP says:

      Not really. As all the graphs show, the bottom 90% doesn’t have much money. So 10% of the 90% leaving (and let’s face it the ultra-wealthy don’t get hit with all the little fees), doesn’t account for squat.

      I also imagine a sizable percentage of those that did leave probably didn’t make them double digit profits that they demand since they didn’t maintain large accounts.

      • scoutermac says:

        From what I have seen seems like most of the wealthy use Chase. Also if enough of the poorer people leave it can still leave a dent in the banks. Money is money no matter where it comes from.

      • BorkBorkBork says:

        I think it was mostly a non-issue.

        I was doing some market research for a regional bank (two states) during the ‘Close your bank account’ day late last year. I later asked them what came of it all, since media made such a big deal about it.

        Only about 1,000 people closed their accounts and left for a CU. Their average bank account: $250. Not even a blip on the banks radar.

  6. Labratt21 says:

    Switch to a CU from BofA. They also helped me refinance my car loan. Got it down from 6.5% to 2.15%!

  7. The Online Presence says:

    It isn’t a credit union, of course, but Ally Bank has a lot of very nice benefits.

    Free Checking Account which earns interest.
    Free Checks.
    Free Debit Card.
    All ATM fees are refunded so you can withdraw money at ANY ATM with no charge to you.
    24/7 customer service.

    Some people are taken back because there are no branches, but deposits can be made by mail or by scanning a check .

    • Scooter McGee says:

      I’ve been very happy with Ally and switched to them as soon as the news about CapOne acquiring INGDirect. If you are concerned about having a bank branch, look around. I set up an account with Huntington taking advantage of their asterisk free checking. No minimums, no monthly fees. Then I can transfer the funds to Ally. It has $6 in it right now since I only use it to make a deposit from somebody who gave me cash, or if Ally’s deposit scan doesn’t like the check.

      Only thing I would change about Ally, better online scan/deposit process and a mobile app where I could take a picture of a check for deposit./

    • PsychicPsycho says:

      Thanks for this! Now that ING is really switching to Capital One I’ve been looking to switch. I’ll have to check them out!

    • longfeltwant says:

      The thing that pisses me off about Ally is that they ruin the first fifteen seconds of a lot of the podcasts I listen to. Yes, thank you Ally bank, I’ve heard you stupid ad a million times, please save your advertising money and make your services cheaper.

    • SenorAnderson says:

      I too have an Ally account. My only complaint is that they don’t have a mobile site/app. The handful of times I’ve need to call customer service it has been great.

  8. webweazel says:

    Gotta watch out for small local banks, too.

    We got a letter about a year ago that they would start charging a fee on our account unless we jumped through hoops- # bill pay online payments, sign up for e-statements, etc. (can’t remember the rest right now) So I went to the bank to sign up for the e-statement portion, and they never even heard of the change in terms and didn’t know what the heck I was talking about.

    Last year, they added a binding arbitration provision.

    A month ago, there is now instated a $7.50 monthly fee if we don’t meet a minimum average daily balance.

    Credit union you say? The (only) one local to us has almost the same exact fee structure.

  9. Duke of URL says:

    I considered changing, but truly – Wells Fargo has treated me well for years. The people have always been polite, friendly and helpful. The company offers a lot of services, and many of them are very useful to me.

    • magnetic says:

      Their fees are twice as big as a local, and with a local, you don’t have to wait 24 hours before actions you take are recorded.

  10. AngryK9 says:

    I have an account at a “big bank” and a small local bank. I use the local bank for everything, and the “big bank” only for storing a small amount of extra cash and occasional small (less than $20) purchases. But I’m considering dumping them both for a different local bank.

  11. Jawaka says:

    So basically 10% of the accounts that were costing banks money to manage and hold left? So mission accomplished for the banks then huh?

    • vastrightwing says:

      While I don’t think it costs a bank a little more than $0.90/month to manage an account, probably the issue is more that they are removing the customers who only contribute a small profit and are trying to keep the bigger profit customers. By charging more fees, they will turn the existing customers into more profitable ones.

      On the other hand, the customers who leave will bring new business to competing banks who can manage to make a profit from the smaller customers.

      This will simply lead to fragmentation of the market place, which I think is a good thing. I don’t like the idea of banks that get too big to fail. I’d much rather see a diverse number of small banks owned by different people. More specifically, keeping money local.

  12. BurtReynolds says:

    I ditched BofA for a CU that is 2 minutes from my house. Lots of in-network ATMs and even other CU branches. No dumb fees. Low interest mortgage and car loan rates. Unlike BofA, I don’t worry about them screwing something up and putting me in banking purgatory while I plead my case for them to fix the mistake.

    My wife happened to leave SunTrust this year as well after thier stillborn debit card fee idea.

  13. smo0 says:

    You know, I sent you a guys a story about my credit union over a week ago.
    You just love to pick and choose don’t you.

  14. Paul in SF says:

    I fled Wells Fargo to a Credit Union and I am kicking myself for not doing it years ago. I had no idea of the amount of money I was giving WF for nothing.