One of the most annoying aspects of the new wave of checking and debit card fees sweeping through the banking sector is the difficulty involved in switching checking accounts to avoid those fees. While that credit union or community bank across the street offering free checking may seem mighty enticing, actually following through with a checking account switch can be tricky.
That's not an accident. There are few things commercial banks prioritize higher than increasing "stickiness," or the tendency of even dissatisfied customers to stick around because moving would be too much of a pain.
That's a big reason why many offer, or used to offer, waivers of monthly maintenance fees in exchange for setting up direct deposit and automatic monthly bill pay. Those things not only tend to increase the average balance you carry in your account, but they also make it much more difficult to switch banks should you get bent out of shape about a fee or a bad customer service experience.
In addition to these tactics, some banks also employ less savory methods to increase stickiness, including tacking on fees for closing accounts and requiring accountholders to appear in person to cancel an account. A new bill recently introduced into the House of Representatives this week by Rep. Brad Miller (D-N.C.) seeks to address such tactics. Here are some of the highlights from the bill:
- Provides consumers the right to close an account at no charge.
- Provides consumers the right to close an account at any time, regardless of whether the balance is positive, zero, or negative.
- Provides consumers the right to close an account in person, by phone, or by other remote means as may be prescribed by regulation.
- Prohibits fees or charges from being assessed to an account after receiving a request to close an account.
- Requires institutions to notify consumers of preauthorized and recurring debits that hit their account for 30 days after a qualified account is closed.
- Requires institutions to remit the balance in a closed account to the customer’s new account electronically if the consumer chooses.
- Provides that consumers must be given at least 30 days to remit payment for an account that is closed with a negative balance before the institution can initiate any collection activity, or reporting to a third party.
- Provides that where an account is closed with a negative balance that is exclusively the result of overdraft or other fees assessed to the account by the depository institution, the institution may not report the account as delinquent to ChexSystems or any similar specialty consumer reporting service.
Given the anti-regulation bent in the House of Representatives right now, I'm not sure of the bill's chances, but I do think some of these rules are a good idea and may be adopted at some point by the CFPB, should that regulator ever get a confirmed director.
What do you think? Do we need a new law to make it easier for consumers to switch banks, or is it easy enough already?