When a relationship just isn’t working for you anymore, it’s often time to move on. That’s true in life – and it’s also true in banking.
Just because you have a long history with your bank doesn’t mean you have to stay in the relationship. If you’re feeling dissatisfied with your bank, a change to something new may be just what you need. Consider these five reasons why breaking up with your bank may be a good idea.
1. Outrageous fees. Once upon a time, most banks offered free checking accounts and fees were few and far between. But during the past 15 years, bank fees have steadily risen, resulting in hefty profits for them and empty pockets for you. During fiscal year 2015, banks earned $42.3 billion on account fees and $32.5 billion on overdraft fees, according to Money magazine. Today, just 14 percent of big bank customers report their checking accounts are free, according to a recent survey by Harris Poll.
The average bank fee for overdrafts also has increased every year for the past 17 years, according to Bankrate. ATM fees also continue to rise. The survey found that withdrawing cash from an out-of-network ATM costs an average customer $4.57 per transaction. When combining ATM and overdraft fees, maintaining a checking account can cost the average customer $5.78 per month or about $70 a year.
2. Mega profits. Let’s face it, banks are all about profits. Most banks are focused on answering to their shareholders rather than pleasing their customers – and shareholders demand continuously rising profits. That’s why big banks are obsessed with hitting ever-rising sales targets, sometimes resulting in unethical practices.For instance, one big bank recently made headlines after firing 5,300 employees for opening new account relationships in their customers’ names without their knowledge. Unfortunately, the aggressive sales tactics that push employees to make unethical decisions are common at many big banks, according to a recent report by National Employment Law Project.
3. No trust. It’s important to have confidence and trust in your banking provider. When measuring the percentage of consumers who trust various financial institutions, a recent Financial Trust Index study showed that banks, national banks, and regional banks all rank near the bottom when compared to credit unions. Credit unions rank at the very top. Credit unions focus on exceptional service experiences and investing earnings into its products and services to lower loan rates, raise deposit rates and keep fees to a minimum. Big banks focus their efforts on exceeding shareholder expectations for rising stock prices and dividends. This focus away from customers’ interests can lead to high costs and poor experiences for consumers.
4. Unfavorable rates. Banks have poor rates when compared to credit unions. According to a study by Informa Research Services, credit unions have lower average rates on credit cards, auto loans, personal loans, and home equity lines of credit. In addition, credit unions have higher average return rates on personal savings, checking, money market, and 1-year certificate accounts. This result can be attributed to credit unions being not-for-profit organizations and investing their earnings to provide value for their members.
5. Switching is easier than you think. While the thought of switching a banking relationship seems daunting, the process is not as difficult as it may seem. In fact, four out of five consumers (80 percent) who have switched financial institutions say it was not difficult at all, according to a recent study by Harris Poll. Rather than quitting your bank cold turkey, you may choose to hold parallel accounts during the transition. Open your new account while keeping your old bank account open for a few weeks. That way, you can be sure your direct deposit, bill pay and other services are transferred to your new account. Once the transition is complete, you can say goodbye to your old bank and begin a relationship built to last.
Once you’ve decided to break up with your bank, consider joining Pacific Service Credit Union. We have five branch locations in the Bay Area, one in Fresno, and more than 5,000 shared branches nationwide. We have been providing world-class financial services to our members for more than 80 years. Learn more about the benefits of membership today!