Photo: Flickr via soundfuryphoto
By the time concrete details on how many consumers actually ditched big banks in 2011 came to light, the final figure – about 5.6 million – wasn’t as high as many finance experts expected. Consumers had every reason to dart, with some banks threatening $5 debit card fees, consumer watchdogs cracking down on dubious overdraft fee practices, no shortage of fee-friendly alternatives, and increasing evidence that so-called “low-profit” customers will soon be elbowed out of the banking game altogether.
So, what’s holding consumers back?
In short, it’s just too much trouble, according to a new report by Consumers Union.
“We found that indeed it can be a hassle to move one’s money – because, simply put,
it takes time and money to move your money,” the authors of the report say. “The process takes several steps and banks don’t always make it clear how to close accounts.”
After sending secret shoppers and poring over disclosure forms at 10 of the largest U.S. banks, what they found was a system so riddled with red tape that it’s no wonder so many consumers are sticking around.
Here’s what’s stopping them:
-The time it takes to transfer automatic deposits and debits from the old account to the new account (four to six weeks in some cases)
-Wait times while automatic deposit and debit transfers are processed (A customer interviewed in the report said, “It took me several months to move over my direct deposits and the half dozen automatic debits I had set up.”)
-Keeping enough cash in the new and old accounts to meet minimum balance requirements while the old account is closed
–The risk of old accounts reopening
-Too little information about bank account closing policies.
-Fees for closing accounts or for certain methods of receiving or transferring remaining balances
While none of the banks charged fees for closing accounts, all of them slapped $25-30 fees on wire transfers between old accounts and new ones. Electronic transfers are the best way to skirt this charge.
Photo: Consumers Union
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