Big Banks Equal Big Fees

In recent news we are hearing more and more about customers leaving big financial institutions in favor of smaller banks simply because the big banks are charging big fees. In today’s trying economic times, even a few cents here and there can make a huge difference when it comes to budgeting for the household.

As related in a story on CNN Money, customers are growing angrier by the moment at the hike in fees associated with accounts that had previously had no fees at all. Two banks specifically mentioned in the article were Bank of America and Citigroup. BoA is now charging a $5 fee each month for using debit cards and Citigroup is charging some customers who don’t maintain a balance of $15,000 a fee of $20 per month.

When consumers stop to think about those costs, they are being called ludicrous. At this point in time, how many people actually have a checking account balance of $15,000? It appears as though lower to middle income households are being targeted to pay for the excesses of the wealthiest.

One man, Tim O’Brien, a Seattle businessman, decided to take his business elsewhere because of his discontent with Bank of America. He felt that the bank was nickel and diming him and he was quite simply, fed up. He now banks at a mid-sized bank in Ohio and has no fees attached to his account.

In similar fashion, people all over the nation are leaving larger financial institutions in favor of small to mid-sized credit unions and banks. Although there isn’t an industry wide study yet as to the exact percentage of customers who are changing banks, it is noteworthy because of all the activity on social networking sites across the web. People are voicing their discontent and it seems as though smaller institutions are keying into this.

For example, Jeff Fisher from Oregon was highly upset when Chase began charging him a fee of $15 monthly on his business account. He took his ‘beef’ to the internet and began tweeting about his ire. Even though Chase was quite close to his place, just a couple blocks in fact, he was willing to undergo inconvenience to make a statement.

Amazingly, not one but two financial institutions responded to his tweets and one even invited him in for a cup of coffee. Jeff says he never got the coffee but he did join OnPoint Credit Union this past February and is quite pleased with their level of service to the small businessman.

What economists are noting is that banks with low or no fees are in a great position to take advantage of the higher fees big banks are charging. One credit union noted by CNN is Navy Federal that boasts approximately 3,000,000 members. Navy Federal stated that they had a rush of new business when BoA made the announcement that they would be charging a new fee. New accounts went up from the typical 2,600 in a single weekend to 3,200.

Of course, there is always a flip side to every story and banks are stating that new government regulations are hurting them so they need to make up the loss somewhere. Prior to new legislation, banks could charge 44 cents per debit card transaction and now they have a cap of 21 cents.

Unfortunately, the average consumer doesn’t want to hear this. Businesses are getting the breaks and average consumers are being asked to eat the loss. Businesses are being charged less than half what they had been to run debit cards and customers are being charged to let businesses slide.

The bottom line? Looks like it’s back to cash if using a debit card is going to cost us that much.

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