Are You Happy With Your Bank?
Since my focus is on credit cards, I keep an eye on the banking industry. This helps me predict trends.
Sometimes the trends look positive for consumers. Sometimes they don't, especially if I sense there's a new fee on the horizon. But for a nice change of pace, I decided to look at another side of the banking business — customer satisfaction.
So I looked at the December 2012 American Customer Satisfaction Index. Here are a few interesting tidbits from the Index:
- Chase scored the highest in customer satisfaction among big banks, followed by Wells Fargo.
- Smaller banks, in general, score higher than big banks.
- Credit unions have the highest satisfaction ratings of all.
When I started digging into the details, it got even more interesting. For instance, Chase is the only big bank that experienced an increase in customer satisfaction in 2012. Let's take a closer look at what's going on. (See also: Why I Like Big Banks)
How the Big Banks Fared
Really, most big banks have an image problem. In many cases, it's their own fault because they make some pretty lame PR blunders.
Bank of America had the lowest score at 66. This bank has been upfront about adding fees over the past few years. For this, they get high marks for transparency, but low marks for underestimating public reaction.
Remember the $5 per month debit card fee they tried to charge? They got flamed on social media and they were pummeled on the airwaves. To Bank of America's credit, they pulled the fee in question. But the damage to their image was already done.
And this isn't well known, but Bank of America is one of the few banks that doesn't apply retroactive rate increases to credit card balances even when they can legally do so. But this kind of positive news doesn't get much play in the media. So part of the problem is the bad PR when they mess up; and then, there's no good PR when they do something nice.
But Chase doesn't seem to have this issue and the bank scored pretty well at 74. I will say that I rarely hear complaints about Chase credit cards. Now that I've said that, if any of you have issues, I'm sure you'll let me know!
I've often said that I think consumers are much smarter now about their finances than they were before the recession. It occurs to me that banks might be smarter now, too. Sure, they're adding fees here and there, but many banks now seem more sensitive to how public opinion impacts the bottom line.
Local Banks Offer the Personal Touch
I use one of the big banks for my checking and savings accounts and I have no complaints. Maybe it's because I use the same branch for all my needs. I even go into the branch now and then, so the people who work there know me and my family. I even got a free tomato plant one day. Maybe I just have a unique situation going on here, but it works for me.
I think this is similar to what you get when you bank with a smaller, local bank. People like to go to a place where everyone knows their name. It's not only pleasant, but it makes you feel special and like your money is in good hands. This welcoming feeling is why people go to the same bars, the same restaurants, and even the same grocery stores.
Besides the warm feeling of being known, another plus with a local bank is that they might negotiate with you on account fees or offer you a credit card even if another issuer would turn you down. Big banks aren't as likely to work with you if you don't meet their requirements upfront.
Survey Says: We Really Like Credit Unions!
Credit unions scored a healthy 82. And this was even down from the previous month, which was at 87.
Remember Bank Transfer Day? It was on November 5, 2011 and it was a reaction to a sudden rash of higher bank fees. Customers were asked to move their money from big banks and put them in credit unions. It was somewhat successful because there was a big increase in credit union members in the past year.
It's certainly not a surprise that credit unions score high in customer satisfaction compared to banks. Banks have a fiduciary duty to make a profit for their shareholders. They're operating in a different environment and with different income goals.
In contrast, a credit union is a nonprofit, financial cooperative that lives to serve its members. Every customer is a member as well as an owner. So credit unions and banks operate in a very different environment.
This is why you'll see many credit union checking accounts without monthly fees. You also get better interest rates at credit unions. The National Credit Union Administration mandates that interest rates on most loans, including credit cards, be capped at 18%.
For many reasons, I'm a fan of credit union credit cards, especially the cards offered by the Pentagon Federal Credit Union (PenFed). But be aware that you'll need excellent credit to qualify for the top credit union cards.
If you're interested in finding a credit union for your banking or to apply for a card, check out aSmarterChoice.org.
I didn't move my money to a credit union on Bank Transfer Day because, like I said, I was happy with my bank. After all, I got a free tomato plant. But I do have my eye on a credit union credit card that I want to apply for this year.
Did any of you move your money to a credit union last year? I'm just curious!
OK, I'd also like to know if you love or hate your bank. And if you don't love your bank, why do you stay?
And here's a really big burning question — do you have a checking account that doesn't charge a monthly fee? I'm wondering if checking accounts fees have sent you packing to a new bank.