Question: Why Do Consumers Switch Banks?
Good article from Kiplinger’s about why consumers switch banks. It provides a excellent list of factors (mostly fees) that consumers should consider before opening their first checking account too.
Here are the six factors listed:
- Monthly service fees
- ATM fees
- Overdraft fees
- Minimum balance requirements
- Low rates on interest-bearing accounts
- Customer service
The article also describes different banking alternatives available to consumers including national banks, local banks, credit unions and online banks:
In fact, you’re twice as likely to find free checking at a credit union than at a commercial bank, according to a study by Bankrate. Credit union fees to use out-of-network ATMs are $1 less, on average, than what banks charge, and one-third of credit unions don’t charge out-of-network ATM fees, according to Bankrate. And 72% of credit union checking accounts don’t have balance requirements. Unlike commercial banks, which are usually for-profit institutions, credit unions are membership-based nonprofit organizations. Members are eligible to join because of a common bond, such as place of employment, place of worship, school, geographical location or membership in an affiliated organization. You can find and research credit unions at CUlookup.com and ASmarterChoice.org.
Online banks that provide services only through the Internet are another alternative. They usually don’t charge a monthly fee, and some reimburse ATM fees, charge low or no overdraft fees and offer interest-bearing accounts that yield more than the national average. See our picks for the best deals in online banking.
Check out our lesson on Selecting a Checking Account
About the Author
Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.