Debit Card Fees May Drive Disgusted Bank Customers to Credit Unions
The days of bank customers complaining about new unfavorable policies but then grudgingly falling in line may be coming to an end. Bank of America may have thought that a mere $5 per month add-on for debit card use would not be enough to inflame its customer base to action, but it could be wrong. In an increasingly anti-bank environment, the fee may send as many as 30 percent of its customers toward the exit doors, a survey suggests.
The ire exhibited by consumers in the wake of Bank of America's recent announcement that it would impose a US$5 monthly fee for using debit cards for retail purchases does not seem to have been a momentary flash -- at least, not based on findings in a survey by Trig (The Research Intelligence Group).
Thirty percent of U.S. consumers would leave their bank over debit card fees, the survey results indicated.
Another 43 percent would move to paying with cash or credit if the bank were to implement such a charge. Only 13 percent of respondents said they would be willing to pay debit card-related fees, assuming they were reasonable.
'Tough it Out'
Twenty-two percent of consumers in households that earned between $35,000 and $49,000 a year would pay the fee, compared with 14 percent of consumers in households that brought in more than $100,000 a year, based on the survey results.
Even those most likely to pay it are not necessarily sanguine, though. They are probably consumers in the low to middle-income sector who feel trapped, Trig found.
"Less affluent consumers know they have fewer options available to them, and so have no choice but to tough it out and deal with it," Robert Kaplan-Sherman, president of the services division for Trig, told CRM Buyer.
However, it is clear that consumers of all income categories are becoming increasingly fed up with the banking industry, he said. "People place a tremendous value on this payment option and to be told they may have to pay a fee for this clearly struck a nerve with a large contingent of consumers."
Anti-bank sentiments are also running high, thanks to the Occupy Wall Street protest, which has spread to many cities, he added.
The question many banks are no doubt asking is how many of this 30 percent will actually follow through with their intention.
It may be that many people are just sounding off, and once they are faced with the inconvenience of making a bank switch they will settle down, suggested Elizabeth Lampert of Elizabeth Lampert PR.
"Remember all of the people who said they were going to leave AT&T for Verizon once they got the iPhone? Well, same thing here," she told CRM Buyer. "People lash out, say what they feel when angry, but most won't actually make the change or migrate."
This time may be different, though.
"I have been speaking with a lot of consumers via social media and in person who are considering not only switching banks, but going to credit unions as a result of debit card fees, Thomas J. Fox, community outreach director at Cambridge Credit Counseling Corp., told CRM Buyer.
"People are irate, and it is palpable," he said. "They have seen how the banks were bailed out, all the work that went into restructuring this industry, and then next thing you know they are imposing these fees."
Credit Unions Gain
Much will depend on how many institutions actually enact such fees, Kaplan-Sherman said. "I think if we see only one or two banks impose these fees, then there will be a higher level of customers leaving them for other institutions."
However, if all or most institutions wind up imposing the debit card fees, consumers will feel they will just have to put up with it, much as air travelers have learned to accept the a la carte fees that the airline industry has started to impose.
Credit unions may find themselves the lucky recipients of at least some of these customers, Kaplan-Sherman said. "We are already seeing reports of changing behavior with applications and deposits at credit union jumping significantly over the past few weeks."