By: Nancy Steadman
Fewer Americans are willing to sit idle when they experience significant discontent with their banks, and a large number show their dissatisfaction by switching to institutions that offer more affordable products. However, a new study shows that many consumers who would like to switch banks are still finding it too challenging to do so as a result of obstacles some banks put in place.
The report, issued by Consumers Union, found that as the one year anniversary of Bank Transfer Day approaches, nearly three quarters of consumers who want to switch banks are hesitant to do so because of the difficulties involved. The most common reason consumers cited for wanting to switch banks was to avoid the rising cost of fees some institutions impose. Others wanted to take advantage of more lucrative bank offerings, such as free checking and rewards programs. Many cited dissatisfaction with the level of customer service they received from their institution. In response, Consumers Union is calling on federal agencies to put new rules in place that make it easier for customers to move their funds to a new institution.
"Consumer frustration has only grown over the past year as bank fees have continued to rise," said Suzanne Martindale, staff attorney for Consumers Union. "But many frustrated consumers end up staying with their bank because switching to a new financial institution can turn into a big hassle. It's time to make it easier for consumers to move their money so they have a real choice when it comes to where to bank."
Proposed regulations may facilitate the transfer process
The group proposed several new rules for institutions to make the transfer process easier. For example, reforms would require banks to bear the responsibility for transferring a customer's automatic payments and deposits from the old account to the new account within 14 days. Currently, the process may take between four to six weeks at the nation's largest banks, a scenario that discourages many customers from switching. In addition, many institutions impose fees for transferring money. The new rules would mandate that electronic transfers be done same-day and at no cost. Finally, some institutions who receive direct deposits or other funds after an account has been closed sometimes re-open the account. Under the proposals, this practice would be prohibited.