August 11, 2014
Consumers with bad banking habits are more likely to get mad and switch
U.S. – Research reveals that consumers who don’t manage their bank accounts carefully experience a significantly more acrimonious relationship with their financial institution than other consumers do, and are much more likely to switch banks frequently.
Consumers who fail to regularly monitor their banking records or frequently overdraw their checking accounts are far more likely to endure a dissonant – and brief – relationship with their bank, according to a survey from MoneyRates.com.
The survey asked respondents about how they manage their banking affairs and how frequently they experience disagreements with their bank and/or switch banks because of disputes. Among those who practice questionable banking habits, such as the group who report overdrawing their checking account more than 12 times per year, the frequency of disagreements with banks was very high: 86 per cent of that group report having multiple disputes with their bank each year, and one third of the respondents in this group say they have disagreements with their bank every week. Conversely, 81 per cent percent of people who never overdraft their accounts say that they rarely or never have disagreements with their banks.
Among people who say they never overdraft their accounts, only two per cent have left more than two banks in the past because of disagreements or bad service. In contrast, among people who overdraft their accounts more than 12 times a year, 66 per cent have had three or more messy splits from their banks.
“People who overdraft their accounts regularly seem to be the same people who are always arguing with their banks and frequently going through the hassle of changing banks,” observes Richard Barrington, senior financial analyst for MoneyRates.com.
Barrington suggests that grouchy financial consumers might want to look in the mirror. “If you are chronically unhappy with one bank after another, perhaps you should not be looking to make yet another bank change. Instead, you may wish to examine your banking habits. If consumers keep having the same type of negative experience with a variety of institutions, the problem might be with their banking habits rather than with the banks.”
Slightly more than 15 per cent of poll respondents reported overdrawing their accounts six or more times a year, including six per cent who said they do it more than 12 times a year. At $30 a pop, this last group is blowing at least $360 a year on unnecessary fees.
Consumers who report more diligent banking habits are far less likely to say they have regular disputes with their banks. Of the respondents who report reviewing their account at least every month, 72 per cent say they rarely have disputes with their banks. 89 per cent of that group have left no more than two banks in the past over dissatisfaction or disputes.
Not surprisingly, the respondents who report few overdrafts also tended to be good record-keepers too. Eighty-six per cent of those who said they never overdraw their account also report reviewing or balancing their account on at least a monthly basis. Among people who have 12 or more overdrafts per year, this number drops to 54 per cent.