Banks have been angering people for a long time now and there might be just one additional reason to add to the list. A new survey has found banks are charging fees to consumers wanting to close their accounts, along with a few other "hassles".
Depending on the bank, these fees can total up to $55.
Consumers Union conducted a study which uncovered that banks appear to be making it difficult for consumers to switch financial institutions. The survey uncovered policies that make transferring banks difficult, and expensive. As a result, even unhappy customers may end up just sticking with the same bank due to switching costs incurred.
“Consumers may be fed up with their bank but they can encounter roadblocks that make moving their money a real headache,” said Suzanne Martindale, staff attorney for Consumers Union, in a news release. “Some bank policies are designed to make it challenging for customers to walk away. That creates customer inertia and stifles competition, making banks less responsive to what consumers need.”
The survey looked at 10 of the top retail banks in the U.S., Bank of America, BB&T, Chase, Citibank, HSBC, PNC, SunTrust, TD Bank, US Bank and Wells Fargo.
Information derived included surveys of the banks and secret shopper investigations. During the compilation of the information gathered, Consumers Union found several obstacles consumers face if they want to switch banks:
• Fees to close accounts
They uncovered that many banks charge fees to close accounts. HSBC, PNC and US Bank charge a $25 fee if the account has been opened 180 days or less; BB&T and Citi charge a $25 fee if the account is closed within 90 days.
Consumers Union found that customers looking to transfer money from their old bank to the new one will be charged $24 - $30 for a wire transfer or $7 to $10 for certified checks. None of the 10 banks allowed the customer a same-day free transfer.
• Zombie accounts
Disturbingly, the survey found that at least two banks, Chase and Bank of America, "sometimes open old accounts after they have been closed by customers." An example given is direct deposits. For instance, if a reroute of deposited money doesn't happen right away (it can take a few weeks), the bank will simply reopen the account. Then customers are potentially hit with penalty or account maintenance fees.
• Lack of information
Consumers Union also found that many banks don't even put account closing policies "in the fine print," and customers have no idea of what needs to transpire to close an account.
“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,” Martindale said. “We need to make it easier for consumers to move their money so they have a real choice when it comes to where to bank.”
Business Week reported this survey was commissioned after consumers were outraged after the Bank of America tried tacking on extra fees for debit cards. This fury led to people looking to move their money out of big banks into smaller ones. Seemingly, this is when the difficulties and challenges to switch banks became more apparent.
The agency made several recommendations in this latest report, suggestions that are planned to be presented to Congress and the Consumer Financial Protection Bureau. The recommendations include specific ways banks should adjust policies to improve industry competition and consumer choice.