Bank fees. No matter how much you dislike them, they’re here to stay. Or are they? Earlier this month, Alliant Bank announced that they would no longer be charging fees for either overdraft or insufficient funds in checking accounts. This follows a June announcement by Ally Bank, which positioned itself as the first large financial institution to enact a no-fee policy.
Citing that “pain points…are particularly onerous for some,” Ally Bank CEO Jeffrey Brown notes that eliminating the fees should help customers stabilize their finances, especially those in low-income and minority communities, of which overdraft and minimum balance fees disproportionately affect.
CivicScience polling shows over half of the Gen Pop has been charged an overdraft or minimum balance fee at some point.
Congress has begun to move towards new laws limiting or banning these kinds of fees, and the Gen Pop is overwhelmingly supportive.
According to the above data, nearly three-quarters of the Gen Pop support federal restrictions on bank fees despite just over half of people having been personally affected by them. Clearly, the charging of bank fees on standard checking accounts is a clear enough problem that even significant numbers of people who aren’t affected by them think the government should step in.
Overdraft and minimum balance fees are a big enough problem that over 60% of respondents, whose banks charge these fees, are at least somewhat likely to change primary banks in order to avoid them.
This sentiment is particularly strong among lower-income groups who are more likely to have a smaller ratio of income to expenses.
Consumers don’t like fees. That much is obvious. But despite the 54% of the Gen Pop that has been charged overdraft or other fees by their bank, a commanding 80% of the same population has a somewhat or very favorable opinion of their personal bank.
Cut across all age groups, overall favorability is significant, especially among those 35 and older. Similarly, while those in the lower-income groups are the least favorable toward their bank, the percentage of favorable respondents is high.
When looking at these numbers against favorability ratings of the banking and finance industry as a whole, a near mirror image emerges.
Almost 70% of the Gen Pop has an unfavorable opinion of the banking industry as a whole.
Favorability is lower among those between the ages of 25 and 54, though 18- to 24-year-olds show an interesting level of favorability that is perhaps explained by their limited interactions with financial institutions up to this point in their lives.
This sentiment of “I don’t like banks, but I like my bank” may explain the apparent disconnect between the Gen Pop’s favorability toward their bank and their likelihood to switch banks to avoid fees.
If nothing else, it explains why nearly half of the Gen Pop hasn’t changed their bank provider in over five years, and another 29% have never switched banks at all.
Whether it’s brand loyalty, the comfort of familiarity, or something else entirely, it seems that consumers are just not inclined to switch banks. Or at least, not easily.
As Congress continues to debate banking fee restrictions, CivicScience will continue to monitor how consumer sentiment shifts within the financial industry.