Is It Time to Divorce Your Bank?

Bank fees on top of more bank fees? No more free checking? Clueless customer service? Hopelessly long phone hold times?

If these complaints are familiar to you, it might just be time to walk – as in out the door — and find a new bank.

Big banks show improvement

Activists who launched Bank Transfer Day in 2011 hoped that angry consumers would abandon big banks in droves. Many did. But, overall, Bank Transfer Day was judged a flop.

“Few people switched, in part because of the grip big banks had on them with their alluring online and mobile-banking services,” Consumer Reports said.

In fact, customers are growing happier with banks, J.D. Power has found. It surveyed bank customers in 11 U.S. regions last year and found satisfaction, even with larger banks, improving. In November, 15 percent of customers reported having a problem or complaint, compared with 24 percent in 2010.

Smaller’s still better

Consumers still prefer smaller banks over large, but big banks’ push to improve service is paying off, says Jim Miller, senior director of banking research at J.D. Power:

Big banks are now doing a better job of making their customers feel like they matter to the bank. When customers visit the branch they are finding the bank representatives are more friendly, more likely to use their name and not as aggressive in pushing sales.

Customers’ biggest gripe by far? Fees, fees and fees, Miller says. But consumers are growing accustomed to the loss of free checking. Or they’re learning to avoid fees, often by maintaining high account balances, he adds.

Popularity of mobile banking

The gap between large banks and their smaller counterparts and credit unions is closing. One reason, J.D. Power says, is that customers are learning to love mobile and online banking, at which big banks excel.

Consumers are placing less stress on personal interaction, where small banks and credit unions traditionally earned their stripes, Miller adds.

The bottom line: Many banks, large and small, are working hard to gain your loyalty. So, if you don’t think your current bank is right for you, the time-honored American response is to vote with your feet. That’s right. Get a divorce.

Divorce your bank: 9 tips

Here’s how to divorce your bank and find a better one.

• Do the research. Spare yourself disappointment and frustration by comparison shopping, as you would for any other product or service. Remember: You’re shopping for a relationship, so trusting your gut is important. Also shop the best savings rates.
• Decide what matters most. There is a lot of variety out there. What works for your pal who prefers online-only banking may not work for you if you need in-person contact. Think about your habits and what you value in a bank.
• Consider alternatives to big banks. Do you prefer online banking? Consider a virtual bank. If you want lower fees, higher interest rates and lots of hand-holding, check out credit unions and smaller banks. The trade-off: Few small banks have the range of products, services and high-tech banking that big banks offer.

• Poll your pals, family members and co-workers. Ask people whose judgment you trust if they recommend their bank and if so, why. You’d get referrals before switching doctors or dentists. Why not for bankers?
• Check banks’ report cards. The Consumer Financial Protection Bureau publishes its collection of consumer complaints. See the complaints database here or read The Wall Street Journal’s summary. (You can file your own complaint here.)
• Look under the hood. Is the bank you are considering insured by the Federal Deposit Insurance Corp.? Use FDIC’s bank finder to research a bank’s financials. The FDIC insures your deposits against loss.
• Take a test-drive. Talk with bankers — by phone and in person — about switching banks and see what service you receive. Check the bank’s website. Find maps of banks’ ATMs to make sure they’re convenient for you and drive by a few ATMs you’ll be using to look at lighting and safety. (The safest ATMs are indoors, not on the street.)
• Hedge your bets. Don’t keep more than $250,000 – the typical FDIC insurance coverage limit — in any one bank. If you do have more than that in a bank, find out from the bank if all your deposits are completely insured.
• Finally, ask your new bank for a switch kit, and leave cash in accounts you’re closing for a few months to cover stray checks. Watch Stacy Johnson’s video tips for switching banks.