You might be fed up with your bank, but moving your money to a new one can be a real hassle, especially since banks put up roadblocks to get you to stay. A new report by Consumers Union, the advocacy arm of Consumer Reports, shows what banks do to make it hard to leave, and what policymakers should do to make it easier.
The report is based on a review of bank policies at the top ten retail banks in the U.S., along with survey information about the banks and a secret shopper investigation that tested the kind of problems consumers can run up against.
"Right now it's up to consumers to ensure a smooth transfer to a new financial institution, even though banks control the means to make it happen," says Suzanne Martindale, staff attorney for Consumers Union.
The report details obstacles such as fees to close accounts and transfer funds, difficulty re-routing automatic deposits and payments, and "zombie accounts," where a closed account is brought back to life if any credit or debit hits the account, then making the old account subject to fees for not having a minimum balance.
The policy changes Consumers Union is calling for to enhance consumer choice and bank competition include:
- Banks should bear the responsibility for transferring your automatic payments and deposits from an old account to a new account within 14 days.
- Banks should provide same-day electronic fund transfers at no cost.
- Check hold times should be reduced so you can quickly access deposits in new accounts.
- Banks should be prohibited from assessing unfair fees for closing accounts and from reopening accounts after you close them.
- Banks should have clear and accessible account closing procedures.
- Bank regulators should examine the feasibility of portable bank account numbers to make switching banks easier.
"Some bank policies are designed to make it challenging for customers to walk away," says Martindale. "That creates customer inertia and stifles competition, making banks less responsive to what consumers need."
For the full Consumers Union report see Trapped at the Bank: Removing Obstacles To Consumer Choice in Banking (pdf).