An overwhelming majority of Americans would consider moving their checking accounts rather than pay a fee increase, a national Bankrate survey has determined.
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Amid widespread speculation the banking industry may be considering increasing fees for checking services, the monthly Financial Security Index found 64% of respondents would consider bolting if slapped with more expensive accounts. Just 28% said they'd tolerate them.
"With restrictions on overdraft fees and a proposed cap on debit card swipe fees, financial institutions need to recover that revenue elsewhere," says Greg McBride, CFA, senior financial analyst at Bankrate. "As a result, they're re-evaluating everything from debit card reward programs to free checking accounts, and anything that was once free is now fair game."
Our poll, however, suggests banks may want to think twice before squeezing consumers for higher checking fees. For one thing, they risk losing lucrative high-income customers. Of those making between $50,000 and $75,000 annually, 73% would consider moving their account. For those earning more than $75,000, the figure rises to 75%.
"They are a very valuable customer base, and they'll use that value to make sure they get what they want," says Marty Mosby, managing director at Guggenheim Partners, the large investment services firm.
On the other hand, among those making $30,000 per year or less, only 60% would consider changing.
Seniors were the most loyal. Slightly less than half of those 65 and older said they'd consider switching over a higher fee. "They do go into the branch, and usually have a person they talk to every time they go there, and so they're connected to that financial institution," says Mosby.
In contrast, the least loyal were those under 30. A whopping 71% say they'd look elsewhere; it was 68% among those aged 30 to 49.
"(Younger people) aren't going to banks because of their location as much as they're going because of online banking and pricing," says Mosby.
In other areas, the FSI survey also found that Americans are increasingly uneasy about their debt levels, and the number of people who feel less secure about their jobs is up even with unemployment falling. Also, people's sentiments about their net worth is unchanging, despite strong stock market gains over the last 12 months.