10/22/2012 9:45 PM ET|
How to break up with your bank
Sick of late fees and other charges? Ready for a financial change of scenery? You're not alone. But a switch may not be so easy.
When Melissa Sullivan recently decided to switch her checking account from a large national bank to a smaller, regional one, she expected to enjoy a new level of customer service and reap the benefit of lower account minimums.
What the Florida marketing administrator didn't expect was a series of hassles, from surprise debit fees (when her initial deposit took far longer to clear than anticipated) to a glitchy online bill-paying system. In the end, says Sullivan, the negatives of the switch have far outweighed the positives. She now wonders, "Why does anyone do this?"
It's a question more banking customers may be asking these days, as record numbers of people move money from one institution to another. Nearly 10% of customers made a change with their primary account in the past year, according to a study by J.D. Power and Associates -- a share that has risen by almost 25% just since 2010. So far, analysts say, most of the shifts have been in favor of smaller banks and credit unions. In fact, membership at credit unions hit 92 million last year, a record high.
The key driver behind all the switching, say industry watchers, is consumer dissatisfaction with the high fees that have become increasingly common in recent years. Add to that what Steve Beck, the founder of consumer-research firm cg42, calls "a broad range of general frustrations," from long wait times at branches to rigid processes for a variety of transactions, and you end up with customers looking for an alternative. Banks themselves are also hastening the trend, as they roll out generous account-opening promotions with high starter interest rates and cash rewards to capture the disaffected.
Still, for consumers, there is one mighty big catch, experts say. Even if New Extra-Friendly Savings & Loan looks better on paper than Old Fee-Sucking Bank, the switch is never simple in an age in which consumers consolidate so much of their financial lives -- from investment accounts to home-equity lines -- in a single institution. Further complicating matters: In today's autopilot-driven financial world, customers typically set up their accounts to issue regular payments and accept direct deposits -- transactions that can all too easily fall through the cracks during a move, leading to penalties, late fees and horrors like missed mortgage payments.
Financial pros, though, say savers eager to switch can protect themselves in several ways. Keeping both old and new accounts fully active for at least three months, for starters, should guarantee that all automated bill payments and direct deposit arrangements transfer from one account to another. Garth Scrivner, a counselor at StanCorp Investment Advisers in Albuquerque, N.M., urges even more caution, telling clients to wait up to six months before closing the old account. That, he says, will also "allow them to be sure the grass is really greener on the other side."
Other possible problems with switching can be resolved in a similar fashion. For example, given that your initial deposit check may take time to clear, experts recommend making that first deposit in cash or with a cashier's check, which speeds the process. Pros also say it's worth asking a potential new bank if it offers a "switch kit." Such packets include checklists of the financial data you'll need to gather and, often, form letters to authorize any necessary third-party transfers.
Of course, before you take the leap to another bank, advocates suggest one more often-overlooked task: Check with your current bank to see if it can offer better rate terms or waive those cringe-inducing penalties. As experts point out, given the huge number of customers willing to jump ship these days, they now wield more power than they might realize. Says Beck, "The takeaway is not to look at this as a one-sided negotiation."
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Two words to stay away from: Wells Fargo
I went to deposit a check into my checking account. The check had my name and address, the same address as the account I was depositing it into. I gave the teller my signed check and deposit slip and the first thing he asks me is, 'Do you have an account with us?' I'm DEPOSITING A CHECK. A check with my home address on it, the same name and address as the deposit slip. Then he asks me for 2 forms of ID, plus has me scan my debit card and enter the password, plus wants to know the last 6 digits of my SS number??? I asked, 'How many criminals try to deposit their own checks into other peoples accounts that just happen to have the same name????? WTF!!!!!!!!
I had two mortgages with them on separate homes. I sold one and had $70,000 that I kept and talked to them about investing it. They told me that they could give me .4% on a 5 year CD. I said, 'That's the best you can do .4%??? They said, 'Yes'. So I applied it to my other mortgage which was at 5% interest. I said, 'Now I'm making 5% on my money.' They weren't overjoyed.
I had an absolutely HORRIBLE experience with BB&T Bank in attempting to close out a checking account. I went into the bank, withdrew all of the money and told them to close out the account because there had been fraudulent activity on that account. I decided to switch all of my money to another bank, as oppose to opening up a new checking account with BBT. (I had not been satisfied with this bank for awhile). The staff member inside the bank stated he had closed out the account. A few days later, I received banking alerts through my smartphone that the account was overdrawn. The same unathorized fraudulent activity was attempting to repeat itself, save for this time, there was no money for them to steal, however, the bank charged overdraft fees. I called to have the fees removed because (a) I had already reported the fraud and (b) I closed the account to prevent this situation from happening!
The bank official stated that I had not closed the account "in time", hence the fees. Bottom line, the bank did not want to remove the fees because I was closing the account and refusing to open up a new one with this same bank. I am still attempting to resolve this mess, but I will nevevr bank with BB&T again!
The bank I moved to had an online "kit" you could print out to make switching as painless as possible. I changed banks because the one I am at now will post deposits to your account all the way up to closing time, which on Fridays is 6 pm, and 5 pm on the other weekdays. The bank I was at would take your deposit, but if it was after 3 pm, they would not post the deposit to your account until 8 am the next business day. That means if you have a withdrawal that comes in before 8 am, they will ding you with an overdraft fee. My feeling is if they can debit my account at midnight when no one is there, why can't they post my payment, or schedule it to be posted, with no one there? Seems like they were just out to hang fees on their customers any way they could. Am very happy with my new bank. It's small, but it has branches in most of the towns where I have to do business, and they gave me an instant MasterCard debit card so I didn't have to wait for one to come in the mail.
The best alternative to convenience is- diversification. Right now, there is every likelihood that we'll lose more than one big bank as we collapse and compress back to where the real economy is. You may be FDIC insured but it may take YEARS to reconcile failure. The smallest relationships get paid first, so... diversify. Also, only CRAZY PEOPLE rely on apps without knowing what they are apps for and to. Electronic banking is convenient, but not practical. If you can't precisely tell why your cash can't keep up with your lifestyle, then you need to develop your budget. You can't do that with apps, you can easily do it when you diversify.
Switching banks is absolutely worth it if your'e not getting free checking. A great place to search for free checking at a community bank or credit union is . Plus, you'll find accounts that actually refund ATM fees and pay you rewards like cash back and high interest.
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