Should I Switch to a Credit Union or Online Bank?
Customers aren’t crazy about their banks. According to a recent survey, consumers give the big banks what amounts to a “C” grade for their overall experience. Many remain loyal, however, despite growing dissatisfaction.
The 2012 J.D. Power and Associates retail banking satisfaction survey measured customer satisfaction in retail banking along six criteria: account activities, account information, facility, fees, problem resolution and product offerings. Results show the biggest hit to customer satisfaction from the year prior is rising disapproval in account fees for things like monthly maintenance.
Banks seem to have offset the negative impact however. Between 2010 and 2012, customers have become increasingly more pleased with bank facilities, locations and service. For example, 76% of customers say they’re greeted by a bank employee when they enter their bank, up from 68% in 2010.
Nonetheless, research shows 72% of consumers would consider switching banks if fees increased, according to Greg McBride of Bankrate.com.
The good news: There are alternatives through credit unions and online banks – and it could be worth it to make the switch. Credit unions, with their community approach to banking, have always been an attractive alternative to the hassles of big banks and the advent of technology has moved more bank activity online, giving tech-savvy consumers a low-cost option. Here’s more of a breakdown of each alternative:
Pros and Cons to Credit Unions
Credit unions are member-owned, non-profit entities. McBride says that translates into a communtiy approach and ultimately more favorable terms for accounts and other products. “Credit unions are perfect for the consumer who wants to get away from rising bank fees. Many are expanding their networks and free checking accounts are still plentiful at credit unions,” he says. The downside: Most charge a nominal fee for membership. They’re relatively small size also often means less support in the form of local branches, 24-hour customer service, online help and ATMs. Recently, however, credit unions have banned together in surcharge-free ATM alliances to help their customers avoid fees. Contact large institutions in your are but also inquire within your workplace, union or professional organization to find what credit unions are available to you.
You can search for a local credit union at ASmarterChoice.org
Perks to Online Banking
Online banking is more popular than ever because of their competitive rates. Banks like Ally, Everbank and ING Direct offer yields well above their traditional counterparts because they’re not limited by large operational cost. Many also offer accounts that reimburse you for ATM fees. “This is an area where online banks match, maybe even beat traditional banks,” says McBride. “A large network of practically free ATMs makes them competitive. It takes away the network edge that the big banks have.” Online banks are also generally easier to join than credit unions and traditional banks with membership just a few clicks away.
How to Decide?
“Before making a move, consider your financial personality; how you bank most often and what’s most important to you from a bank,” says McBride. There are undoubtedly advantages to banking with large institutions. If you’re someone that makes regular cash deposits, likes access to a teller or depends on mobile banking, there’s no match for the big banks. Their networks and support come at a cost however – namely increasing fees. Credit unions and online banks offer higher yields on their accounts and less fees on average.
To help you better compare, Bankrate has an easy-to-use tool to locate financial institutions in your area – or online- with the best rates and other features to fit your needs.
Photo Courtesy, 401(K) 2012.
