Recent regulatory changes in the banking industry have limited the ability of financial institutions to charge overdraft fees, which will greatly impact the profitability of banks. As a result, many banks are looking to reinstate annual fees for checking accounts and debit cards to make up the difference.
Consumers should be on the alert for excessive new fees; as banks look to ensure continued profitability for their shareholders. It seems you’re going to get charged one way or another, so what can you do?
Well, many people are turning to credit unions as the solution to escape high fees. One in 10 participants in a recent Mintel survey had switched their primary bank account to a credit union in the past year.
What’s the reason for this shift? Most people want a relationship with their banking institution, one based on openness and fairness. The Mintel Comperemedia study shows only 36% of big bank customers trust their bank, compared to 57% of credit union customers.
Why the difference? Banks are owned by investors, while credit unions are cooperatives – which mean they are owned by the same people who have their savings, checking accounts, and loans there. Credit unions are required by law to return their profits to account holders via better rates, better service, or lower fees.
Many consumers continue to be wary of larger banks, citing fees and distrust. In the research, consumers described trust in a financial brand in very similar ways to trust in personal relationships, with more than 75% placing honesty and respect at the top of their list of 12 attributes for both.
With fees for basic banking services on the rise, you should ask yourself “Do I trust my bank?” and if the answer gives you pause; it might be a good time to join a credit union.