Your Bank: To Switch or Not to Switch?
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Your Bank: To Switch or Not to Switch?

Even though Bank of America canceled the planned $5 monthly debit fee charge, the public outcry continues and many are pushing a movement called "Bank Transfer Day." However, is switching your bank really the right move for you?

After the news broke that Bank of America and other big banks were planning on charging monthly fees for customers to use their debit cards, a national public outcry ensued. Petitions against the debit card fee were signed by hundreds of thousands of people online, The Guardian reports. BofA did back down from implementing the fee, which is great news for loyal Bank of America customers. Even though many customers are still upset over the bank’s previous intentions, how many of those people will actually switch banks? The result may surprise you. According to a study of BBC Watchdog viewers, people in Briton are more likely to get divorced than switch banks, even when they are highly dissatisfied with their bank’s service.

People in the British study claim they view the process of switching banks to be “a pointless and time consuming exercise,” which clearly expresses exasperation with the banking industry as a whole. While many Americans likely echo those sentiments, others are attempting to rally the masses in order to get people to switch to credit unions with more (perceived) reasonable terms, even going as far as to promote a national “Bank Transfer Day,” The Huffington Post reports. “Bank Transfer Day,” designated as November 5, 2011, encourages everyone to go out and switch their big-bank accounts to a local credit union account. While that may be good advice for some people, that advice won’t benefit everyone.

Here’s why: Just like the same prescription medication and clothing wardrobe won’t work for everyone, the same bank (or type of bank) won’t benefit everyone either. Credit unions are a wonderful type of financial institution, and they (on average) have lower interest rates on loans and higher rates on deposit accounts. But credit unions aren’t a panacea; they aren’t the remedy for all of the banking industry woes and they aren’t the best option for every consumer. Many people (especially those who travel a lot) may be better off with a big-name national bank like Bank of America so that they can be assured no matter where they go in the country, they can find a branch (and an ATM) if needed. Other people may find that a local credit union works great for them, depending upon their banking and lifestyle habits.

People shouldn’t stay with their bank no matter what (especially if they would divorce their bank had it been a spouse), nor should they blindly deposit all of their money in a local credit union just because it’s not a “big bank.” While it is important to be cautious about rising bank fees, it’s also important to consider your individual needs and choose a bank that benefits you best.

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  • Winter

    November 03, 2011

    Really? The motley fool has debunked the myths about credit unions, you might want to review and amend your post (international and nationwide access is not an issue). Studies show that members of credit unions save an average of $180 a year in better rates and lower fees.

    A nice benefit, aye?

  • Abee

    November 03, 2011

    I think the author makes a good point. The average user may save $180 but if you travel a lot and want easy access to your money without having to pay ATM fees, or want a sophisticated online banking platform, then a credit union might not be for you. That being said, I do plan to switch to a small bank or credit union in the near-future. I think in general, they are better run.

  • J.G.

    November 03, 2011

    All big banks have now abandoned their plans to charge debit card fees, but they still need to make up for the huge revenue losses they will suffer as a result of the passing of the Durbin Amendment ($7 billion annually or so) and they will find a way to do so. It could be that they choose to cut back on credit card rewards or introductory offers or it could be something else.

    The bottom line is that at the end new revenue sources will be found and the banks will recoup their losses. As I've said before, the end result will be a rise in revenue for big-box retailers, due to lower debit interchange fees, at the expense of consumers who will end up paying higher bank fees of some sort or other.

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