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Replacing customers pricey for banks

By Claes Bell, CFA · Bankrate.com
Thursday, January 3, 2013
Posted: 4 pm ET

When you're waiting on hold with a call center or facing a recalcitrant teller insisting he would love to help you but he just isn't allowed to handle your issue, it's easy to forget that as a bank customer, you have value.

No, I'm not talking about what I'm sure are many outstanding qualities you undoubtedly possess as a human being, but actual monetary value.

Signing up customers for new accounts costs banks money -- quite a bit, actually. Not only do they spend money on advertising and promotion to get customers in the door in the first place, but they also have to pay people to fill out and process your application, as well as other costs.

According to an October report by banking technology provider Andera and CorePROFIT, a banking industry consultancy and research firm, it costs community banks about $220 to sign up a customer for a checking account at a branch. For credit unions, the numbers are also eye-opening. It cost an average of $442 to attract each new member in 2012, according to Callahan & Associates.

The cost to acquire new customers may be marginally higher or lower at the big national banks, but the point remains the same. If you close your checking account, replacing you will cost hundreds of dollars, so your bank may want to cut you a little slack on your $30 overdraft.

That may be why, at least in my experience, escalating a complaint with a bank tends to get better results than dealing with rank-and-file customer service representatives. Managers probably have a better sense of the big picture when it comes to their business, and may work harder to keep a customer that they know will generate hundreds or thousands of dollars' worth of revenue than a CSR who likely makes the same paycheck, regardless of how many customers close their accounts.

So, the next time you're negotiating over bank fees, some misplaced money or another issue, remember you have a couple hundred dollars' worth of extra leverage behind you.

What do you think? Does your bank treat you like a valuable commodity or a white elephant? How do you bargain with banks?

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19 Comments
tom
January 05, 2013 at 4:54 pm

banks fees are excessive and if you ask politely to have them reversed, most of the time it will be done with out a fuss. So go for it and be nice

Jay
January 05, 2013 at 4:54 pm

@Tim, it's not the monthly fees that cause overdraft fees - it's illegal for a bank to charge a fee caused by a fee & the automated systems don't allow it. However, if that fee comes out, and you wind up having spent the money with either a check already written or a pending credit based transaction, then you can be charged for that because you did technically spend more than you have. The fee may cause you to have less money than you expected, but that just emphasizes the importance of keeping a budget and transaction record. If you're riding the line, then it's your responsibility for making sure that A) You know the fees that are applicable to your account (consult the fee schedule you received when you opened your account & that is sent out annually) and that B) You're keeping track of your spending and payments made that may not represent in your live balance yet.

Greg
January 05, 2013 at 4:50 pm

I have been with Wells Fargo for over 20 years and I love them. I find that they have the best customer service in the industry. I have never had a problem with them that they were not ready and willing to help find a positive solution to the situation. I highly recommend them to everyone I know.

angelina
January 05, 2013 at 4:01 pm

i think this is a ridiculous article. yes if you make a fuss, people are a little more willing to try to make you happy... but to make a fuss just because you dont want to pay a fee you very well deserve to pay, such as overdrawing on your account, thats not fair to the employees who are following policy and procedure at their bank for you to call them names or start "cussing" or just making a big scene. it also makes you look like a fool in front of surrounding customers...... Banking is NOT a new concept.. its 2013 for goodness sake!

Tazz67
January 05, 2013 at 3:11 pm

@ Towmeah, I know how you feel. I suggest that you shop around for another bank.
The bank my son has is killing him with bank fees, and he's not overdrawing his account either... he's a struggling college student who's part time job doesn't allow him the luxury of keeping any balances at times.
And they're banks out there, that will allow you to have a free checking. I'm having him switch to another bank.

Sandy
January 05, 2013 at 11:29 am

I agree with Tony. People need to learn to be responsible adults. Our society has turned into an instant gratification, no fault, excuse driven bunch of lazy people. Make a budget and know where you are with your finances before you spend money.

Tim
January 05, 2013 at 11:29 am

Tony; i agree but if you were charged an over draft fee that was caused by a month fee then i would think all banks would wave the over draft fee if you talk with management. this happened to me once and my bank happily reimbursed my account.

Towmeah
January 05, 2013 at 11:29 am

my experience has been that my bank is making money off of me if my account goes under 50.00 but I don't make enough money to keep that amount in their not to mention they are slow at handling business just saying.

Becky
January 05, 2013 at 11:16 am

ABSOLUTELY, Tony!!

Tony
January 05, 2013 at 9:05 am

What most people don't realize is that your checking accounts are not loans. People try to "beat the system" by paying bills before the money is available in their account to cover those bills. If you are going to spend money you don't have, then yes, you should pay a penalty for it.
Not to mention, every banking institute is a for profit company. No bank is a non-profit company.