Browse releases

By date

September 2016
August 2016
July 2016
June 2016
May 2016
April 2016
March 2016
February 2016
January 2016
December 2015
November 2015
October 2015
September 2015
August 2015
July 2015
June 2015
May 2015
April 2015
March 2015
February 2015
January 2015
December 2014
November 2014
October 2014
September 2014
August 2014
July 2014
June 2014
May 2014
April 2014
March 2014
February 2014
January 2014
December 2013
November 2013
October 2013
September 2013
August 2013
July 2013
June 2013
May 2013
April 2013
March 2013
February 2013
January 2013
December 2012
November 2012
October 2012
September 2012
August 2012
July 2012
June 2012
May 2012
April 2012
March 2012
February 2012
January 2012
December 2011
November 2011
October 2011
September 2011
August 2011
July 2011
June 2011
May 2011
April 2011
March 2011
February 2011
January 2011
December 2010
November 2010
October 2010
September 2010
August 2010
July 2010
June 2010
May 2010
April 2010
March 2010
February 2010
January 2010
December 2009
November 2009
October 2009
September 2009
August 2009
July 2009
June 2009
May 2009
April 2009
March 2009
February 2009
January 2009
December 2008
November 2008
October 2008
September 2008
August 2008
July 2008
June 2008
May 2008
April 2008
March 2008
February 2008
January 2008
December 2007
November 2007
February 2007
January 2007
December 2006

Media Resources

Print

Release Date: 10/31/2012

One Year after Bank Transfer Day, Bank Switching Obstacles Remain

Consumers Union Calls for Reforms to Make It Easier to Move Your Money

As the one year anniversary of Bank Transfer Day approaches, Consumers Union, the public policy and advocacy arm of Consumer Reports, renewed its call for Congress and the Consumer Financial Protection Bureau to enact reforms that would make it easier for consumers to move their money to a new financial institution.

“Consumer frustration has only grown over the past year as bank fees have continued to rise,” said Suzanne Martindale, staff attorney for Consumer 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.” 

Bank Transfer Day took place on November 5, 2011, and was a grassroots protest of unfair bank practices, including Bank of America’s planned $5 debit card fee.  While Bank Transfer Day helped mobilize dissatisfied consumers to switch banks, many have stayed with their bank even though checking account fees have continued to climb.       

2012 Bankrate survey found that only 39 percent of banks offered a checking account without requiring customers to maintain a minimum balance or pay a monthly fee.  That’s down from 76 percent of banks who offered free checking in 2009.    The average minimum balance required to avoid a monthly fee is $723.02, up 23 percent from 2011.  A Consumer Reports investigation earlier this year found that, on average, the biggest banks charge higher fees to consumers compared to credit unions and smaller community banks.

According to the Bankrate survey, 72 percent of consumers reported that they would consider switching banks if checking account fees went up.  But consumers who are fed up with rising bank fees can encounter roadblocks that make moving their money that prevent them from following through.  In July, a Consumer Reports national public opinion poll found that nearly one fifth of consumers had considered switching to a new financial institution in the previous 12 months, but the challenge of transferring automatic payments and other factors kept half of them from making the switch. 

Consumers Union’s Trapped at the Bank report highlighted the many obstacles consumers can face if they decide to switch banks.  Banks lock in customers by encouraging them to use certain services like automatic payments and direct deposits in order to avoid monthly fees. Re-routing automatic payments and deposits into a new account can take four to six weeks and can be a very intimidating and complicated process for some consumers. Research shows that customers who utilize automatic deposits and payments are far less likely to switch accounts.

Having enough money to maintain two accounts during the switching process also can pose a significant barrier.  Because switching accounts can take up to six weeks, the only safe bet is to have enough money in both accounts to cover any potential automatic debits.  Consumers may be confronted with fees to close accounts or to transfer money into new accounts. 

Figuring out how to make the switch can be a confusing process for many consumers.  None of the top ten largest banks reviewed by Consumers Union provided customers with clear instructions for closing accounts on their web sites or in written account disclosures.

“Obstacles to switching banks can trip up even the most determined consumer,” said Pamela Banks, senior policy counsel at Consumers Union.  “All of these hurdles create customer inertia and stifle the kind of competition we need to make banks more responsive to consumers.” 

Consumers Union has called on Congress and the Consumer Financial Protection Bureau to consider a number of policy changes to enhance consumer choice and bank competition:

  • Banks should be required to bear the responsibility for transferring a customer’s automatic payments and deposits from the old account to the new account within 14 days

  • Banks should provide same-day electronic fund transfers at no cost to consumers

  • Check hold times should be reduced so consumers can quickly access deposits in new accounts

  • Banks should be prohibited from assessing unfair fees for closing accounts

  • Banks should be prohibited from reopening accounts after consumers close them

  • Banks should be required to provide clear and accessible account closing procedures

  • Bank regulators should examine the feasibility of portable bank account numbers to facilitate easier bank switching.

For tips for consumers who are unhappy with their bank, see Consumer Reports’ More Bank Fees Are Coming:  How to Fight Back or Flee.

Contacts:
Michael McCauley, Consumers Union, 415.902.9537 (cell)/415.431.6747 ext 126 (office) or mmccauley@consumer.org
David Butler, Consmers Union, 202.462.6262 or dbutler@consumer.org
Kara Kelber, Consumers Union, 202.462.6262 or kkelber@consumer.org

See press release archive

RSS News Feed

Get all the latest information from the CR Press Room delivered right to your desktop.