Banking Obstacles regarding control of your own money

“Trapped at the Bank”: New CU report finds obstacles to switching bank accounts

http://defendyourdollars.org/posts/2282-trapped-at-the-bank-new-cu-report-finds-obstacles-to-switching-bank-accounts#comment-25147

Posted by Suzanne Martindale in Banking 

Since the 2008 financial crisis and the big bank bailouts, consumers have grown wary of the biggest banks in the U.S. trying to squeeze them with new fees or reduced services.  (Remember that BofA $5 debit fee they tried to pin on their customers?)

But a lot of consumers have stayed put at the big banks.  Why?  There could be a lot of reasons, but one of them is definitely this: it takes time and money to move your money.

      • If you have automatic deposits and debits set up, it can be a nightmare transferring it all over to a new account.  In the meantime, you may have to keep two accounts open at once, and have enough money to make sure you can pay bills from at least one of them.
      • And even if you close your old account, some banks may reopen it if a stray credit or debit hits it.

Based on extensive research looking at the policies of the top ten retail banks in the U.S., our new report identifies the obstacles to switching bank accounts, discusses what other countries are doing to try and address the problem, and makes some commonsense recommendations for how the U.S. can enhance competition in the marketplace and make it easier for consumers to change banks:

  •  Banks should bear the responsibility to transfer the automatic credits and debits from old to new accounts.
  • Banks should provide same-day electronic fund transfers at no cost to consumer.
  • Checkhold times should be reduced so that consumers can quickly access deposits in their new accounts.
  • There should be no punitive fees to close an account.
  • Banks should not reopen accounts after consumers close them.
  • Account closing procedures must be transparent and easy to locate.
  • The feasibility of bank account number portability should be examined.

Have you tried to move your money?

12 Responses to ““Trapped at the Bank”: obstacles to switching bank accounts”

  1. Shira says:
    May 31, 2012 at 7:39 am

    I had to close my checking account on short notice to remove a name on it. Simply closing this account and opening a new one in the same bank caused literally months of major mess!

    Checks bounced from the old account, notifications to payees of the new account number did not go through, and my electricity was very nearly turned off while I was abroad.

    I shudder to think what it would be like to change banks!

  2. Wahoo says:

    Just another reason not to do business with a mega-monster bank. They don’t care about you and never will care about you as a customer. You are only a profit target in their eyes.

    Stick with a credit union if eligible …

    …and if not a small community bank. They will value your business because it is in the best interest of their membership and your local economy.

  3. Carol says:
    May 31, 2012 at 8:49 am

    When my bank (Bank of America) tried to stop me from moving four (4) accounts to a Savings & Loan (right across the street!), I got so angry I started screaming in the middle of the bank (which was Friday Full) about their increased fees; poor customer service; and their neat little trick of holding my deposits to be recorded AFTER my payment debits which often caused fees due to insufficient funds (even tho’ the bank was holding $60,000 of mine!).

    I yelled out that anyone who was there to open an account should look elsewhere and a few choice words for those who were current customers like me.

    AFTER THAT: I went to the Savings & Loan and told them what happened and they offered to take care of ALL of the transfers and auto-pay bills – AND THEY DID IT ALL plus giving me $400 if I stayed with them for 6 months or more. Needless to say I am still with them and it’s going on three years now! SAVINGS & LOANS ROCK!!

  4. MrM says:
    May 31, 2012 at 10:00 am

    It’s certainly a huge hassle to switch financial institutions. I should know – I’ve been there. Transferring my money from a big bank to my credit union took several weeks until I got all my bills sorted out.

    However, after getting past the initial headaches the rewards and good feeling of knowing I am no longer supporting a predatory financial institution far surpassed any anxiety I may have felt.

    Do it. Now. It’s worth it.

  5. R. U. says:
    May 31, 2012 at 10:21 am

    I recall my experiences trying to close account with US Bank. I had not been actively using the checking account for months, but I still had about $200. in the account.

    I went to the bank and inform them that I wanted to close the account, and shall write a $200. check to close it completely. To may surprise, the clerk at the bank told me that they can’t issue me the funds! And of course, I was shocked and demanded the reason for withholding my own money.

    She backed off, and ordered the teller to issue me the cash, and closed the account. I never heard from them again.

    Another instance, was with Bank of America. I was leaving for an extended stay in Europe, and wanted to close my savings account. I was told that they can’t release the funds. Same reaction from me, same backing off from them. To avoid a “scene”, my funds were handed to me very reluctantly to my great disgust. Naturally, I no longer did business with these two banks.

    Washington Mutual (now closed, thank goodness) is another sneaky bank. I had more than $6,000. in my checking account, but when I wrote a check for a $100. I was charged $10. to automatically loan me the amount from my savings account with them which had another $4,000. I was so furious, and immediately demanded that both accounts be closed. They refunded the silly charges, of course, but by then I no longer wish to do business with them.

    However, there are banks such as Wells Fargo Bank, Patelco Credit Union, and First Bank that gave me no trouble when I attempted to close any accounts with them. [That was shear luck]

    So, it is hard to tell when a bank suddenly starts “acting up” and try to enforce arbitrary rules that infuriate and frustrate the customers. I am amazed that there are no laws to protect unsuspecting customers.

    Business transactions with banks ought to be as easy as depositing money (entering a business relationship) with them as it is withdrawing the money (ending the business relationship).

  6. K. says:
    May 31, 2012 at 1:04 pm

    Years ago i had a us bank account they tried to charge me $5 because a piece of mail was returned.

    Also they would say funds would be available the next day. Well if you put a deposit in on monday ( for example) then they wouldnt process until Tuesday and then not available until Wednesday. Once i deposted money in the atm at the bank on sunday night, on monday I wrote a check by phone and it bounced.

    They played so many games it was unbelievable and very shady

  7. H.  says:
    May 31, 2012 at 2:44 pm

    The guidelines posted above should also apply to brokerage firms.

    We tried to transfer some stocks held jointly with a deceased family member to a different brokerage beginning in February and were unable to accomplish this until May by which time the stocks had declined in value.

    Meanwhile Morgan Stanley was charging $150/quarter low balance fee when the account had 0ver $18000 in it.

    We filed 3 W-9s to verify our soc sec # and name and all the receiving brokerage was told is the info did not match what Morgan Stanley had, although we had already sent them an original death certificate, copies of a driver’s license and utility bills to document our identity.

    Every time you call, not only does a different person answer their 800 number but the call goes to a different regional call center. Their system is set up so that no one is responsible or held accountable. [This is actually by design within any given bank.]

    When we finally got someone who wasn’t a zombie it turned out Morgan Stanley had the wrong soc sec # and birthdate for our deceased family member, who had an account there over 30 years. Also the account number was changed and the account was transferred from the local brokerage to a regional center without informing us. We suspect the original broker intentionally changed info on the account so Morgan Stabley could hold onto the money and we’d give up and go away. [Please remember that my problems with METABANK concerned how they held my own money from me and then lied to me. The fact that other institutions may do the same or similar things that harm customers doesn’t surprise me because METABANK offers classes teaching their banking practices to others…. Left to regulate themselves, they have taken advantage of the good will of their own customer base…. Shame on all of them!!!]

  8. J.says:
    June 1, 2012 at 6:21 am

    US bank made it impossiable to close a checking account.

    I called them to close the account, they could not do over the phone. so I stopped at a branch office and was told that the person that could close my account was not in and I should return another day. I am handicapped and going to their office several times is not an option.

    I called the manager and got no where. As I only had less than $100 I just wrote out a check and never went back. Well to my suprise, US bank started charging me service charges monthly for not having a balance. The tab is over $800 now. No amount of calls, letters will fix this issue and it has damanged my credit rating. NEVER go to US Bank. [This convinces me.]

  9. G. says:
    June 3, 2012 at 1:11 pm

    While there are certainly innumerable incidents of problems caused by banks, I suppose most of those are caused by bank employees who do not understand or follow rules relating to customer relationships, or are caused by the client (directly or indirectly).

    My own expierence, over some 60 years, has been that banks, large and small, generally make considerable efforts to help their clients. I opened my principal current bank account nearly 60 years ago in a start-up local bank, which was taken over successively by larger and larger banks. Today it is with Bank of America and I do my banking at an office many miles from the office where the account originated, yet I’ve only had positive experiences there and at BoA offices from Honolulu to Miami and many places in between.

    My wife has her account with a small local bank and also has had mostly positive experience with them.

    In the few instances in which problems have come up with a particular bank employee, we’ve always been able to resolve them quickly by speaking to a superior. If a bank client can’t do that successfully, then it’s definitely time to change banks.[Your advice to dump a bank where the service is poor is good advice.]

  10. D. B.  says:
    June 5, 2012 at 5:48 pm

    We had a good balance at BoA; I’ve deferred the hassle by simply changing my direct deposit paycheck to my credit union checking account, while gradually spending the remaining BoA account funds.

    Not looking forward to actually doing it, but I can take a day’s leave from work, and hopefully run several errands…and put on my determined face to make a scene as needed.[Good luck with this!!!]

  11. B. M. says:
    June 11, 2012 at 7:00 am

    Boy, am I glad I live in Germany! We don’t have these problems. [ Nice to know that someplace in this world has a better banking system.]

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