… or does the thought of switching to a credit union give you hives?
According to a poll by Consumers Union one in every five people thought about moving their money from a big bank to a credit union or a community bank, but stopped because they thought it would be too much work.
The study, which polled a random sampling of individuals throughout the past year found that although 43% wanted to move their money due to fee increases for regular bank services, 63% did not make the switch because they were concerned that moving automatic payments and deposits would be too much of a hassle. Of the individuals polled, 37% believed that the entire process would be too time consuming and 28% feared that they would be slapped with fees for making a change.
Consumer fears surrounding transfer fees are not completely off base. According to a March 2012 Consumers Union report, none of the largest 10 banks will transfer your funds free of charge. Certified check fees range from $7 to $10 and wire transfers fees are between $24 and $30.
Fred Becker, President/CEO of the National Association of Federal Credit Unions (NAFCU) says that moving your money is not as painful as people may believe.
“The best way is to describe it as an analogy. The cable company always got on my nerves but in this case it actually is difficult to switch,” he says. “You have to take off an entire day, which in my case is usually Saturday and be there to wait as they did their work and then wait for the new cable company to show up and finish the job.”
“Switching to a credit union isn’t as nearly as painful but everyone has a certain threshold that they hit--like an itch you can no longer scratch until it becomes infected,” he says. “Once the infection sets in you have to do something about it.”
Becker says that getting consumers to move their money takes a concerted effort between the consumer, the banks and the credit unions. “Although the consumer has to be ready, the credit union has to be prepared to market and promote how easy it is to switch.”
“Additionally, people have to be upset with their bank and if banks continue to make mistakes and upset consumers, more people will reach the threshold where they want to make the switch.”
He recalls a new member who joined Arlington Federal Community Credit Union ($194.5 million, Arlington, VA) and was interviewed during the Bank Transfer Day frenzy. New member Jewelle Dalrymple said, “It didn't really make a difference to me because I was already feeling the bruises you just never know what else they have up their sleeve.”
In fact Patty Briotta, NAFCU Public Relations Manager remembers seeing another new member on TV talking about how swift the process went for him. “I recall seeing a segment on TV where a new member, who joined a Charlotte credit union said that it only took him 12 minutes to make the switch.”
According to Rich Helber, President/CEO of Tropical Financial Credit Union ($724 million, Miramar, FL), the biggest hurdle overcoming the initial step. "We have found that once a person comes into a branch and talks to a member service rep they don't have trouble making the switch,” he says. “The thing that's stopping them is making that initial contact.”
According to branch representatives at Tropical Financial, member service reps have never had someone walk away without opening an account for fear it would take too much effort to make the switch. Helber says that the biggest concern they have is locations, but once shared branching and CoOp network ATMs are explained that objection is easily overcome.
Although a recent study conducted by Javelin Strategy & Research reports that 11% consumers are likely to switch primary financial institutions (PFIs) in 2012, it won’t be fee increases that motivate people to leave.
In a June 2012 press release Jim Van Dyke, President of Javelin said, "Ultimately, consumers are driven by convenience more than fees and protests. Giant banks will need to drive home their messaging around convenience, mobile banking, and other services that smaller banks don't -- or can't -- offer. Smaller banks can play to their strengths of lower fees, convenience, and customer service, but they will need to beef up their mobile banking and mobile deposit offerings."
Javelin’s report studied factors behind why customers stay or leave their primary financial institution. High on the list is technology with switchers willing to pay an estimated $92 million in fees for just four value-added services: money orders, cashier's checks, safe-deposit box rentals, and mobile deposit.
Mark Schwanhausser, Senior Analyst, Multichannel Financial Services at Javelin said, "Our Bankographic Benchmark research shows that banks are still in danger of losing customers to FIs that can better respond to their needs, especially in the areas of mobile banking and self-service technology. With $675 billion of deposits and $92 million in fee revenue at play, smaller banks and credit unions really have the opportunity to win new customers."
Back in November when Bank Transfer Day was at its height, Mother Jones writer Josh Harkinson took his readers along for the ride when he decided to switch from Wells Fargo to San Francisco Fire Credit Union ($785 million, San Francisco, CA).
Despite what Javelin found (account switching based on convenience), Harkinson says that after sneaky fees drained his bank account, he reached his own threshold and researched the hoopla surrounding Bank Transfer Day.
He decided on San Francisco Fire Credit Union because the credit union supported firefighters, was open to all people living in the area and had good reviews online, averaging five stars on Yelp.
Once he arrived at the credit union he recalls speaking with a local hairstylist who found that switching from Wells Fargo to the credit union would end up saving him $65 a month.
He told Harkinson that he couldn’t believe he didn’t think of it sooner. "It's because we are kind of delivered into this system that our parents had. We kind of had this blind allegiance."
Harkinson reports an easy, friendly scenario at the credit union during the account opening. “Try as I may, I can't find any other reason not to sign up,” he wrote. “Free online bill pay: check. Fee-free overdraft protection linked to a credit card: check. Free online check deposits: check. Free banking on smart phones: check. Free change-sorting machine: check. The Fire Credit Union will even give you a personalized debit card. The khaki-clad employee pulls out his own card, which bears a picture of his golden retriever.”
After his ethereal visit to the credit union, he stopped by Wells Fargo to close his account. He describes a different vibe at the bank, more cold and staid as he explained his case to a Wells Fargo personal banker.
Harkinson told the personal banker about the number of fees from Wells Fargo, especially ones derived from using an ATM in another state. He then followed up by relaying San Francisco Fire Credit Union’s policy of refunding foreign ATM fees.
The Wells Fargo personal banker’s response was, "Unfortunately that's something we can't really compete-we don't have an account that offers that. If you are finding yourself in that situation a lot, I can see how that would be better for you."
Although the banker half-heartedly tried to cross sell the convenience of Wells Fargo locations, he emits, "But yeah, I can see the appeal of the credit union too, because they are not-for-profit, so, you know, they're able to do things like reimburse those fees, because they are not trying to make a profit off of each transaction. You know what I mean?"
Have you had enough of your bank but don’t know where to begin? Find a credit union near you and inquire about a switch kit or how to move your money.By Gina Ragusa