High bank fees are the primary reason why US customers are leaving banking institutions according to latest survey report.

US market research analysts Gartner has reported that more customers leave banks because of high bank fees than fears over security or account fraud. According to an online survey it conducted in August, one in five customers who leave a US banking institution did so over high bank fees while only one in 25 customers left because of concerns over security.

The Gartner survey included 5000 adult respondents and found that almost one in four were charged an overdraft fee in the last year with 63% of those charged believing the fee was unfair and excessive.

“Consumers switch banks more because of excessive fees than because of security,” said Avivah Litan, vice president and distinguished analyst at Gartner. “Banks spend considerable marketing dollars touting security features as a reason to do business with their institutions, but if their primary goals are customer acquisition and retention, they should simply lower or eliminate overdraft fees. Banks would be better off marketing low fee structures rather than security features if their business plans can indeed support such a strategy.”

According to Gartner, banks are spending millions of dollars in advertising telling their customers their money is safe and often talk about zero-liability when using credit and debit cards. Some are also extending this to online banking. However, Gartner believes that more customers would rather hear about lower bank fees than how safe their money is.

Based on the report, Gartner says that customers earning less than $US25,000 a year pay higher overdraft fees than those on $US100,000 or more. Those customers with the highest net-worth are claimed to be paying no bank fees at all.

While overdraft fees in excess of $US30 are common with 54% of low-income earners paying in excess of that level, Gartner believes it costs banks “$US50cents to electronically return a payment due to insufficient funds.”

“Consumers report overdraft fees of $30 to $40 for an overdraft in the pennies or single dollars range,” Ms. Litan said. “Consumers also complain that banks take too long to process deposits, or fail to alert customers that accounts are in overdraft. Banks charge overdraft fees on debit card purchases they authorize, even if the account balances can't cover it, and even when funds arrive in the account before settlement.”

It may well be worth asking the question if the greatest security risk to your money isn’t the banks themselves.

---