I must confess that I love watching consumers exercise their right to shop where they believe they’ll get the best value.
The latest article on MSN highlights that online banks are seeing large increases in new members as people, fed up by the latest fee hikes at commercial banks, shop around for better deals. While I still think credit unions are the best place to stash your money and get your loans, online banks also offer much better rates, and services than the traditional commercial banks like Bank of America or Chase. This is one of the best examples I have ever seen on why we can’t allow consolidation to reduce competitiveness in the banking sector. Imagine if there were only a few large commercial banks where we could do business. It would be similar to the airlines where they all watch each other for rate increases and follow suit. Having credit unions and smaller community banks drastically improves the competitive environment for everyone and ensures we get the best rates. Apparently the big banks are counting on the majority of their customers being too lazy to make the switch.
The reality is that it’s not very hard to switch banks. If you take a little time to open new accounts and then gradually shift your deposits and payments over to those new accounts, you can be set up at a new institution in no time. Just make sure that you choose the right institution when you switch. While it isn’t a big deal to make the move, it’s enough of an effort that you don’t want to be doing it every 6 months!
Anyway, go check out the article at MSN. They mention a couple of the better online banks out there including Ally and ING.
Sun says
The consolidation of banks also meant the consolidation of power. Without much scrutiny of that power means big banks can do whatever they feel like. I’m very glad there are checks in place because no power can police themselves.
You should checkout PerkStreet as part of the online banks. 1% cash back on your debit card if you sign for your transaction. It is 2% cash back if you maintain a $5k minimum in the checking account.