If You Hate Your Bank Then I Have Bad News For You

I read a lot of other personal finance blogs, as I think getting different voices, opinions and thoughts on various items is great.  I have quite a few (see my blog roll) that I love and others that I read in passing.  One topic I see time and again are posts that tie back to complaints about banks.

Bank of America seems to take the brunt of bloggers ire, but it seems like many banks catch the rancor.  The complaints seem to boil down to a few common themes:

  • High fees
  • Poor customer service
  • Complaints about banks having taken bailout money

If you’ve complained about banks or get fired up about banks, I have bad news for you: You’re wasting your time.

Now, don’t get me wrong, I’m normally a big advocate for complaining when you aren’t getting good service or good value for your money, so it might seem like my advice is being overly dismissive or favoring the banks, but I assure you it’s not.  What it is simple truth.

Here are a few things that the average (or even the above average) person needs to realize about the banks, and I’ll start with the bottom bullet out of the items above and then move to more general terms:

  • The bailout is old news – While it might anger people that banks took bailout money from the government (and if you read the comments of just about any article written about the banking industry in Seeking Alpha, it certainly is), the fact is that the banks have moved on.  While you might be aghast to this day about the audacity of the banks having taken this money, I guarantee that there is not one single meeting being called, one single resource being dedicated, or any amount of money spent at the banks to deal with this issue.  Why? Because it’s in the past.  The banks took the money, most paid it back, and they’ve moved on.  Any and all resources are being dedicated to things that the bank is doing today or plans on doing tomorrow.  They probably cared a lot about the bailouts from 2008 through 2010, but they no longer care, and they never will again.
  • The banks don’t care if you like them – Many people harken to the old days where you had bankers that, if things are to be believed, acted like George Bailey in ‘It’s A Wonderful Life’ where he cared about each person he did business with, and not only cared about them, but made personal sacrifices to ensure that his customers could depend on the bank.  Folks, this doesn’t exist any more.  To expect that is silly.  These are corporations and they are responsible to deliver profits.  Banks get a lot of ire, but the fact is, that any publicly traded company is driven by the same responsibility.  Banks appear more greedy because they deal directly with money, but it’s true of any industry.
  • Most customers do not make banks money – You’ve heard of the 80-20 rule, and in many businesses, there is a variation of this where 80% of the profit is derived from 20% of the customers.  I think this is even more skewed in banking.  The simple truth is that your checking account with an average balance of $1,000 is not adding much to the bottom line, so when they raise your fees, and you threaten to leave, this does not present a problem for the bank.
  • They know it’s harder to leave – Say you’re one of the people that does start looking around and decide that you’re going to leave, banks know that it’s harder to do so than ever.  Before, you could just throw away your checkbook, walk into a bank, and walk out with your money in hand.  Now, you have to change your direct deposit.  If you pay bills from your bank, you have to change all those over.  It’s a harrowing process and banks know that most people don’t want to do it and won’t do it if given a choice.
  • They know it won’t matter – So you’ve decided you’re so mad that you’re going to leave the bank, and you do.  You change your direct deposit, update your bill pay, switch over your bank cards, the whole nine yards.  You sit back, triumphantly having shown the bank that you’re not going to be stuck with their latest fee or have to carry their new required balance.  Want to know how long that’s going to last?  Probably as long as it takes to go to the mailbox and get the notification from your new bank, the one that tells you that they’re implementing the same fees or something similar that will result in the same thing.   Even credit unions, once considered the safe haven from fees, have implemented more stringent requirements that result in many of the same fees, balance requirements or otherwise.

So, is it hopeless?  Are we just supposed to bend over and take it?

No, I would never agree with that.  I don’t think you just roll over and take it, but you can do a few things:

  • Understand your requirements – Many people pay fees because they don’t know they don’t have to.  If your bank starts charging you $8 per month, you might be able to waive that by increasing your balance by a few hundred dollars a month or by implementing direct deposit.  Before just accepting, first make sure you understand.
  • Rely less on banks – The bank where we do most of our banking is primarily a pass-through.  The money gets deposited, bills get paid, and the rest (less enough of a cushion to keep the minimum balance requirement intact) goes elsewhere.  We don’t have a savings account there.  We don’t invest there.  We don’t have our health savings account there.  What he have is basic.
  • Focus your customer service time elsewhere – As I indicated above, unless your name is Mark Cuban (and if Mark Cuban is reading this blog, well how awesome would that be) than the bank really doesn’t care if you complain.  While it might make sense to write on their Facebook wall or Twitter page or something like that, you might realize that your time would be better spent trying to get improved customer service elsewhere.  At a place where, if you left as a customer, it could impact their bottom line.

I don’t think we should take poor customer service from banks, but I think we would be wise to understand the limitations that we have as customers, and how we can best approach the issues that we have to do what we can to mitigate the things that make us see red.

What do you think?  Is it a better use of time to complain about banks or should we minimize the impact and be more pro-active to work around the issues we have, understanding that banks don’t have motivation to make customers ‘happy’?

21 thoughts on “If You Hate Your Bank Then I Have Bad News For You”

  1. Good article. I stopped complaining about banks because it does no good. You can only make a difference in how they operate if you make them a lot of money. If you have millions in deposits and investments with them, then you have a voice. If you have a few thousand dollars in your bank account, you are just a simple number to them.

  2. Good post! I stopped complaining about them a long time ago myself. While I may not like many of the things most of them are guilty of, it is what it is. We do what we can to get around the fees and go from there.

  3. Good points! Banking is a relationship and you need to form a good one. I always suggest talking with your bank before you need them. Most people open an account and never talk to their bank. Ask questions, you would be amazed how helpful they can be to you. I have banked with B of A for 40+ years and have had very few problems. The few problems I have had were resolved in my favor. If you understand their main business is lending because that is where they make money. Their business customers are more important to them than you are. Despite these 2 facts, you can get reasonable service. Just tell them what bothers you and ask them how to resolve it.

  4. I have a special seething pit of hatred in my heart reserved for Bank of America. But I corrected that problem long ago by moving all my money to credit unions. While I despise banks, I have no problems investing in them. I recently grabbed up some WFC and I’m eyeing BAC and GS for future investments.

    Some people might accuse me of having a double standard. I do. When I’m investing all I care about is making money. When I’m living life I worry about other things too. It’s best if the two spheres never overlap.

    • I see no issues. I have stock in oil companies at whose retail gas locations I never visit. I save money on the front end by going to cheaper stations and make money on the back end with the rising stock.

  5. I’ve worked in a few banks in the past and I have to say that most of your points are very accurate. In particular, the huge focus of banks is to get you signed up with as many services as possible, making it harder and harder for you to switch to another bank.

  6. I can’t say that I have had any bad experiences with banks. I have always paid attention to what the minimum balance must be and, as you mention, use it as a pass through for paying bills. The rest goes to other investments as long as my checking account stays where it should be. The only annoyance for me is when they try to up-sell me on another product when I deposit money.

  7. I couldn’t disagree more with your take on Banks. If banks don’t care why do they spend millions in advertising enticing us to bank with them? Because they vey much care. The more money they have on deposit the more money they can “leverage” and lend out, And the greater the chance they will have of doing future business with you…for car loans…your retirement account …your home improvement loan and the list goes on. I have on many occasions argued with my Bank and have recieved concessions. Make no mistake there is no more competitive business than banking…

    • Very good points, and while it’s great that you got concessions, I’ll argue that many of the things you got concessions on are probably things you didn’t have to argue about five or ten years ago, and also that banks are taking advantage of the fact that most people are not as proactive as you. I agree 100% that there is competition, but if all the competitors are implementing less customer service oriented practices, it makes it pretty clear that profits are the number on priority, not customers.

  8. I’m with BoA still only because it’s such a pain to transfer. If I have a local bank branch, there are certain things I expect, like a notary public and the ability to make a cheap or free wire transfer. If I can’t, then why should I have my money there at all?

    I’ll move to an online bank when I have the “umph” for it–and own a smart phone so I can deposit checks easily! I’ve already taken my mortgage elsewhere, and even if I refi again, that’s certainly not coming back because the rates they offer are absurd.

    For me, it’s more of a minor irritation than anything else. It irks me, but I know there’s nothing to be done about it, so I’m biding my time. People complain because it makes us feel better, even if it doesn’t really help the situation!

    • I think many people are in your boat, where it’s just too ‘hard’ to switch. But, what is there really to switch to that’s better? that’s the hard part.

  9. I agree with your point that the bank don’t care if you like them or not. Because at one point or another, you will eventually need them and will have no choice in the end but to avail of their services.

    • If they all lower the bar, it’s not like you can simply stop banking. Or can you? 🙂

  10. Good points. I’m not really one for complaining about my banking situation. There are a million banks out there, and even if it is harder to leave, you always have the option. I wish I could make more on my money than I am currently, yet that isn’t really the banks fault. Hopefully, that will turn around again in the future.

  11. It gets worse: we’re moving from bailout to bail-in.

    The difference? With a bail-in the government doesn’t use taxpayer money to save a bank, they take the banks’ customers’ money to bail out the bank. That’s right, they simply confiscate your money and give it to the bank. Hey, you put your money in the bank already, right? What’s the big deal?

    Do you think that’s outrageous? Far-fetched? Won’t ever happen?

    Tell that to Cyprus depositors, who had their deposits confiscated to save those banks. And the authorities got away with it. The ice has been broken.

    You know how governments work: “Hey, it worked over there… and nobody lost an election! What better way to pay back those million dollar campaign contributions from our friendly bank lobbyists? When was the last time Danny Depositor ever gave me anything for my campaign, anyway?”

    No smiley face on this comment…

    • I hope we never get to a situation where the government confiscates assets. I didn’t agree with it in Cypres, and I certainly think the outrage here would make it a last resort option.

  12. I did switch all my accounts from BOA and quit using my credit card from there because of terrible customer service. They certainly did not care at all. I’ve found a local bank that has wonderful service and they actually know my name when I come in. I do have an online savings account for the better rate, but my day to day stuff goes to the local bank.

    • I think it’s harder and harder to find that type of experience. Hopefuly it lasts for you.

  13. I keep my money at the local credit union, because I personally know the people who work there (My mom used to work there), so they tend to treat me very well. Since it is a local, members owned credit union, they seem to care more about you. I’ve never kept my money in a bank, because the credit union has always treated me well.

    • That’s great! I think that’s becoming harder and harder to find, so hold on to it as long as you can!

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