What will you do if banks hike fees?
Bank lobbyists are constantly saying the industry needs to raise its fees on customers. The banks don’t want to charge customers more, they say. But the costs associated with new regulations is forcing them to act.
Banks may raise their fees. But I doubt the fee increases will stick. The finance industry is remarkably profitable. So much for the deadening cost of regulation.
For instance, the National Foundation for Credit Counseling’s most recent online poll asked consumers what they would do if their bank raised the fees on their checking account. A clear majority of those interviewed in March–73%–said they would shop for another bank, protest the action, or close the account.
Here is the actual survey question and results:
If my bank raised the fees on my checking account, I would:
A. Probably never notice = 16%
B. Grin and bear it = 11%
C. Shop for another bank = 51%
D. Complain to them = 16%
E. Close my account and begin using a pre-paid debt card = 6%
That’s one side of the equation. The other important factor is that soaring finance industry profits say that there will be plenty of opportunities for disgruntled customers to find a lower fee bank (or credit union).
Kathleen Madigan, a former colleague and economics writer for Dow Jones Newswires, has a terrific post on finance industry profits. Look at this chart:
It’s a stunning performance.
After rising like the Phoenix, the financial industry now accounts for about 30% of all operating profits. That’s an amazing share given that the sector accounts for less than 10% of the value added in the economy.
So, hold on to your wallet when bank lobbyists plead poverty and say consumers are going to have to pay more for bank services. Then shop for a better deal. You don’t have to accept the higher fees. You won’t have to, either. It’s called consumer capitalism.
We’re here to help you navigate this changed world and economy.
Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.
In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.
Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.