Customer loyalty doesn't last very long at banks with lousy interest rates. With CD rates at record lows, many bank clients don't have much incentive to stick around.
A survey by Ernst & Young found that when a bank's customers are looking to switch, one of the key reasons was low interest rates. Thirty percent of customers who were shopping for new banks said they were looking for better places to grow their investment, according to the Global Consumer Banking Survey for 2012. The survey was conducted worldwide in February and March.
Multibanking is another trend the survey identified. With so many convenient and low-cost banking options, consumers can use several different financial institutions to achieve different goals. Only 31 percent of consumers say they use only one bank. And 34 percent said they open accounts at different banks to take advantage of higher interest rates.
A majority of U.S. banking customers, 60 percent, said that they would consider switching to a bank with a loyalty program that offered lower fees or higher rates on deposits.
One day, banks will be in the position of needing deposits again, but until then savers are at the mercy of the vagaries of the market. Luckily there are plenty of options for rate shoppers, from credit unions to online banks.
Would you switch your bank based on interest rates?
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