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If you thought it was tough to be a bank customer in 2011, you better buckle up tight in the new year.We picked the brains of NerdWallet marketing VP Anisha Sekar to find out what the whizzes behind the personal finance site predict banking will be like in 2012.
There’s both good news and bad news in their virtual crystal ball, but one thing is clearly evident:
Those of you in the 99% better start making moves – now.
Banks will be ramping up efforts to court customers with good credit in 2012.
'With everything so volatile (in the markets) right now, people are very unwilling to take on credit risks,' Sekar says.
The reason credit-conscious consumers are so attractive is their staying power. Once they're in the banks' pocket, they'll have a much lower risk of defaulting on their payments and continue to pay interest over the lifetime of their card.
While banks trip over themselves to attract better customers in the new year, those with poor credit histories will get elbowed out in the process, Sekar says.
Now's definitely the time to start thinking about shifting your checking account balance to a credit union, if you haven't already.
Big banks won't be sad to see you go (they don't make a profit off checking accounts anyway) and you'll have a better shot at a union that offers interest-bearing accounts.
If you're wondering how banks intend to suck in better customers, we've got two words for you:
Credit card bonuses reached unprecedented levels in 2011 but NerdWallet predicts those records will be shattered in 2012.
'Last year, we saw bonuses of 1,000 worth of airline miles with signing and we're going to keep seeing (trends) like that,' Sekar says.
We all remember how well the whole $5 debit card fee plan worked out for banks, and they're going to be looking for even more ways to cut costs in the new year.
That means shuttering tons of bricks-and-mortar locations and ramping up their online banking services, NerdWallet predicts.
'Now that checking accounts have become so much less profitable...banks know they'll have to bring down costs in order to be anything close to profitable,' Sekar says.
Banks will start indirectly kicking 'unprofitable' customers to the curb with even more hidden fees in 2012, Sekar says.
As we've seen over the last few months, it's already happening.
Bank of America kicked in a $5 debit card replacement fee in September and TD Bank increased its incoming wire transfer, certified check, money order and stop-payment fees in November, according to NerdWallet.
Overdraft fees are going to be big, Sekar says.
Banks levy fees whenever they have to transfer money from your savings to checking account if you're in danger of overdrawing. Like this unfortunate teen learned the hard way, it comes at a hefty price.
'People don't understand (they are able to) decline that overdraft protection,' Sekar says. 'That way, your transaction will be denied but you're not charged (a fee).
Check with your bank to opt-out of the service if you haven't already.
Relationship banking is basically when a bank packages several financial services together to make them all more appealing to consumers -- and keep them from opening a checking account alone.
To do that, they'll push credit card applications and other loans to new customers and incentivise the deal to boot, Sekar says.
BoA has already restructured its fees to make a joint credit/checking account a better deal for potential customers.
As banks drive away lower-income customers, people most likely either ditch the banking system altogether or run into the arms of credit unions.
While credit unions can't really compete with big banks' marketing power and rewards programs, they make up for any shortcomings by catering to consumers on a personal level.
They also offer lower interest rates on loans and have little to no fees on checking accounts, Sekar says.
'Credit unions are a lot more friendly to people with lower credit scores,' she added. 'Some work with you either by giving you financial literacy education or giving smaller loans and letting (consumers) build up.'
Look for a rise in auto loans and credit card services, NerdWallet predicts.
'The Credit Union National Association mentioned they really want to grow (those services),' Sekar says. 'I wonder if they might want to look at less-than-perfect credit market that major banks are ignoring. Where they can compete is on interest rates rather than rewards.'
Not everyone will run to credit unions, however.
Turned off by hidden fees and high interest rates, it's likely many consumers who decide to flee banks might head in the wrong direction.
'My worry is that ... people on the lower end of the income spectrum are going to be driven out of the banking system and move toward prepaid credit cards, payday loans and short-term avenues that are really detrimental to their health in the long-term,' Sekar says.
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