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Published: May 2012

Switching banks costs more than just headaches for consumers

A new report from Consumers Union looks at the obstacles faced by consumers who decide to switch banks.

Download the report, entitled "Trapped at the bank: Removing obstacles to consumer choice in banking"

According to the report, when a consumer decides to switch banks, they often encounter a myriad of delays and fees, all designed to keep bank accounts at one place. The report also talks about so-called "zombie accounts," or accounts that are reopened by the bank after customers have closed them. If the bank receives a deposit into the account, which often happens if automatic deposits aren't re-routed quickly enough, the account reopens and the customer may then face hundreds of dollar in penalty fees if the deposit dips below the minimum.

Consumers Union is calling on Congress and the Consumer Financial Protection Bureau to consider a number of policy changes to enhance consumer choice and bank competition:

- Banks should be required to bear the responsibility for transferring a customer’s automatic payments and deposits from the old account to the new account within 14 days
- Banks should provide same-day electronic fund transfers at no cost to consumers
- Check hold times should be reduced so consumers can quickly access deposits in new accounts
- Banks should be prohibited from assessing unfair fees for closing accounts
- Banks should be prohibited from reopening accounts after consumers close them
- Banks should be required to provide clear and accessible account closing procedures
- Bank regulators should examine the feasibility of portable bank account numbers to facilitate easier bank switching.

For consumer tips on switching banks, see Consumers Union’s Move Your Money Checklist

For More Information

Read more about the report

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Banking   ♦   Consumer Protection   ♦