THE BASIS POINT

Move Your Money? Well, Maybe Later.

 

Before the financial crisis, some say banking was too concentrated and clubby. Now, many say that it is even more so, especially since many banks are failing while Chase, Citi, BofA, and Wells are growing. And big banks aren’t really trying to boost service with lower fees and paying higher rates on checking accounts.

So why aren’t significant numbers of consumers moving on to other banks?

For you and me, “switching costs” are a real hassle. Shutting down a bank account, with its credit card or utility bill-paying links, transferring the account, and setting up all the links isn’t anyone’s idea of a good time. The same goes for refinancing – it is often easier for a borrower to do it with the same company that already holds your loan.

And even though many gripe about their bank, many also find a big-name bank’s name reassuring.

Most developed nations have a more concentrated banking system than ours. But too much concentration of the financial industry increases risk, since a handful of dominant players are more likely to make the same kind of mistakes.

But unless consumers rise up to move their money to credit unions or smaller banks, the market isn’t going to deal with the problem – and that means Washington might have to.

 

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Comments [ 1 ]
  1. sugarleg says:

    I am a former Too Big To Fail Bank Account Customer.  I have never been happier with my new community bank.  the hassles to which you refer are extremely minor and part of making smart and mature adult decisions.  kind of like how we have to get our teeth cleaned once a year and remember to floss daily. 

    open a new account at your community bank or credit union, then start making the transitions.  it will take 2-3 weeks for your paychecks to start auto-depositing to the new account and after that all the other switch-overs are instant, based on you sitting on the couch with your new checkbook, watching American Idol, and inputting the new info.  about 4-6 weeks after you open the new account, you can close your TBTF account.  and then you will have an extra bonus of awesomeness that you just did something good for you, for your community and the economy.  money talks, LOUDLY. 

    my new bank is not open on Saturdays, which I thought was going to be horrifying, but they are open til 6 on weekdays and when I rush in at 5:55PM they greet me by name and with a smile.  and they take care of me and my money.

    MOVE YOUR MONEY.  do it.

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