Switching from one bank to another is a decision driven by several reasons including dissatisfaction with services. The most current scandal in the banking sector involves Wells Fargo. The San Francisco-based bank allegedly opened over two million bank accounts without authorization from customers in a bid to meet aggressive sales targets. Wells Fargo is now required to pay a cumulative fine of $185 million. The Consumer Financial Protection Bureau also claims that Wells Fargo opened credit accounts in addition to using fake emails to sign up clients for online banking services.
The CEO of the bank, John G Stumpf has been taken to task over the accusations by Massachusetts Senator Elizabeth Warren. However, the consequences that Stumpf will have to face are in the hands of the shareholders and the board of Wells Fargo. What is clear is that customers are disappointed and outraged, to say the least, over the present situation with the bank. This situation is just one example where bank customers can consider moving to a new bank. The timing at the moment is just right for individuals looking to switch banks.
Favorable Interest Rates
The high-interest rates that several banks are providing are one reason for customers to switch their accounts. Currently, banks such as Ally, Capital One, Barclays, American Express, and Synchrony Bank that provide online services are offering high-interest rates of about 1.05% for their FDIC-insured savings accounts. One way this is possible is because operating online means that the banks don’t incur costs for running physical banking locations. Goldman Sachs is another one that has a 1.05% interest rate for its retail banking services. The “Big Short” classification of the institution, however, is one reason that customers may stay away from it after the experience they had with Wells Fargo.
FDIC put the national average interest rate for savings accounts at only 0.06% as for all balances as of April 2016. As for Sept. 22, the rates for Wells Fargo are 0.01% and 0.03%. What this means is that a savings account with Wells Fargo will earn considerably less after year than an account with a bank such as Ally.
At a time when interest rates for savings accounts are very low, getting high rate offers is the perfect enticement for customers to make the switch. There is also the advantage that FDIC-insured accounts come with.
One downside that these banks have is that they are online, meaning there are some limitations. The limited range of products available for online customers is one. For example, American Express doesn’t come with a checking account, which means that customers have to pay charges if they can’t keep the minimum balance. Another issue is that clients have a hard time depositing physical cash in an account that is only operational online. There is also the complication of getting face-to-face customer service when a bank doesn’t have a brick and mortar location. Online banking offers its ups and downs, but for some customers, the advantage of getting good returns outshines the cons.