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Despite hassles, disgruntled customers more willing to switch banks

Upset customers are more willing to switch banks nowadays, despite the hassles of opening new accounts and setting up new links for deposits and payments.

A new study found consumers perceive banks as more profit-driven and less customer-focused than before. And 66 percent would consider switching, up from 54 percent three years ago, according to the J.D. Power and Associates 2010 survey on retail banking satisfaction.

Large banks are especially vulnerable to losing customers, J.D. Power found. Some big banks with merged operations — JPMorgan Chase, Citigroup and Bank of America — posted their lowest satisfaction levels in years, according to a separate survey from the American Consumer Satisfaction Index.

Willie Morris of Fort Lauderdale recently switched, after his Wachovia debit card suddenly stopped working. Wells Fargo had bought his bank and was supposed to have sent him a new card, he learned.

Depositors are often wary of the effort required to switch banks, especially the hours it can take to set up payments. A mistake can trigger charges for missed or late payments and hurt their credit scores.

But the transition can be eased — or even avoided — with some simple steps, experts say.

First, talk to your existing bank to see if it can make amends. That's especially true if you have multiple accounts. Banks want to keep that business, said banking analyst Ken Thomas of Miami.

"Try to work it out, the way you might with Sprint or a home phone company. Tell them you're not happy," he said. "You may be transferred to the customer retention department, who might offer you credit or other compensation. Don't just walk away. Negotiate."

If you decide to switch, figure out what you really need in a new bank. For example, if you tend to withdraw cash regularly and travel around, you may want a bank with an extensive ATM network. If you require varied and customized services for a small business, you may prefer a bank near your office where you can build a personal relationship. Or if you work mainly from a laptop or mobile device, you may want an online bank, said Greg McBride, senior financial analyst with website Bankrate.com.

"Assess your financial personality," McBride said. "If you're going to leave, make sure you are going to get a setup that works for you financially."

In choosing a new bank, consider what others say, including consumer advocates.

The Center for Responsible Lending, for instance, recently published a guide that identifies warning signs for potentially bad banking practices. For example, on a checking account, if the bank does not tell you that you can link to other accounts to cut fees, that's "a major red flag," the banking guide said.

Alicia Laszewski of Davie sought advice from family and friends before switching recently to Northern Trust. She dropped Citibank after a mixup left her husband on an overseas trip unable to withdraw cash. When she called for help, a service representative tried to sell her a new loan.

She chose Northern Trust on advice that a branch near her house offered responsive staff.

"The banking industry has become so competitive, it seems many banks are just trying to sell, sell, sell instead focusing on service, service, service, which builds a lot more loyalty," Laszewski said.

Surveys show customers switch banks mainly because of poor customer service and high fees. J.D. Power's banking specialist, Michael Beird, said banks that offer options to consumers — such as links with other accounts to cut fees and early communications like balance alerts — score higher in satisfaction.

After his Wachovia debit card mess, Morris considered switching to a smaller bank for more personal service, but opted for Chase. A social media consultant, he liked Chase's online offerings, especially a new iPhone application that lets you make deposits by taking a photograph.

"I'm on the go a lot, so I want to be able to take a picture of a check and send it to them without having to look for branch," Morris said.

How to make the transition less perilous

The step-by-step process to switch banks once you choose a new one generally works like this:

• Open a new account with a small deposit.

• Order your new debit card and checks, which typically take one to two weeks to arrive.

• If you use direct deposit, ask your employer to send your payment to the new account — a process that may take a couple of pay periods.

• Contact companies that directly debit your account to inform them to start debiting your account from a certain date in the future — a process that may take a billing cycle or two.

• Set up online bill pay for your new account and stop automatic bill pay from your old account.

• Once you have started receiving direct deposit and are sure your checks and payments have cleared, work with your old bank to close the old account in a way that averts fees.

Despite hassles, disgruntled customers more willing to switch banks 11/20/10 [Last modified: Monday, November 7, 2011 1:22pm]
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