Big Bank Fees Causing Customer Exodus

Big banks are taking a hit that many credit repair professionals hope will serve as a wake-up call and a return to customer-oriented service. In the wake of the economic meltdown, the subsequent federal bailout and continuing tight credit, consumer ire with the banking industry is starting to change where Americans bank. Anger and frustration over the myriad and increasing fees big banks have begun charging for previously free services has caused many customers to flee America’s big banks in favor of smaller regional or community banks and credit unions.

In an effort to recoup recession losses and get around new restrictions imposed by the recently passed financial reform bill, major U.S. banks have instituted a plethora of new fees and upped the rates of fees already in place. Fees for making a deposit, processing an ATM transaction, visiting a teller window, using the night depository, utilizing online bill payment services and other typical bank services have outraged consumers. Cash-strapped bank customers argue that these services, most of which were previously provided without charge, should still be free. After all, they argue, shouldn’t bank customers benefit from depositing their money in the bank? If banks are going to use customer money to make more money, bank customers think they should get something in return. So far, all they’ve gotten is more fees and severely restricted credit opportunities, neither of which have done anything to endear banks to their customers.

Excessive bank fees may be the instigating force for consumer unhappiness with major banks, but poor customer service and credit denial are the triggers that compel big bank customers to withdraw their cash and deposit it elsewhere. Community and regional banks and credit unions have become the happy beneficiaries of the growing big bank exodus.

Consumers are finding that community banks and credit unions provide more customer-friendly service than their behemoth counterparts. Small community banks rely on support from local residents and businesses for their business. To attract customers, community banks offer stellar, more personalized customer service and provide a greater number of services at no charge. Because they are more vested in the local community, community banks are also more apt to lend money and extend credit lines to their customers.