A Too-Convenient Truth: Your Bank Has You Hooked on Auto-Pay
Many of us have set up our bank accounts online to pay our bills and receive our paychecks automatically. These conveniences come with a steep price. As The New York Times reported Sunday, banks use auto-pay features to hold onto customers. Knowing it means figuring out how to shift all those auto-payments keeps many from switching -- even in the face of onerous bank fees.
According to the story, a marketing study by tech finance company Fiserv showed that using the Internet to pay bills, do automatic deductions and send electronic checks reduced customer turnover for banks by up to 95%. Other evidence that fewer people are switching institutions: In 2011, only 7% of consumers have switched banks in 2011, compared to 12% in 2010, according to surveys by Javelin Strategy and Research.
Recognizing that it's too difficult to switch banks and worried about what that means for competition, the Australian government is considering a bill designed to make it easier for consumers to switch banking institutions. The bill proposed earlier this year would force banks to reroute bills to the new bank for 13 months after an account changed institutions.
Meanwhile, more than 42,000 people on Facebook are attending "Bank Transfer Day," a virtual event initiated by a grassroots movement. Scheduled for Nov. 5, it's aimed at mobilizing consumers to move their funds from retail banks to credit unions. Third-party operators such as this Switch Agent service are also making a play to capitalize on account changers.