When Bank of America announced a monthly $5 debit card fee would take effect in 2012, questions about the potential backlash ran through my head. Would consumers put up with this? Would the bank cancel the fee to combat lost business? How angry would the fee make Gen Y?
After speaking to several of my peers and observing their posts on social media sites, it became clear that Gen Y-ers have no problem ditching their banks to avoid fees.
Mindy, a 29-year-old Portland, Ore., native and her husband Dan, 28, proudly moved their money from Chase Bank into a credit union when fee chatter began to grow (Chase is among the banks testing a $3 monthly debit card fee). Mindy told Credit Union Times that she and Dan first considered switching to a CU when Washington Mutual, their bank at the time, merged with Chase and started showing signs of becoming more corporate. But they stuck it out for a few years, “mostly because of convenience,” she said.
Refinancing their auto loan for a lower interest rate is another reason the couple cites for making the switch, but it was the Occupy Wall Street movement and the threat of fees that cinched the deal, Mindy said. “I read an article posted on the Occupy Portland website in which someone suggested moving money from a corporate bank to a credit union as a way of showing solidarity with the movement, and it just clicked,” she said.
The couple joined the Portland-based $2.9 billion OnPoint Community CU on their sixth wedding anniversary. “It was strangely romantic, opening up our accounts together,” Mindy recalled. “It sort of felt like we were starting a new chapter in our lives.” She added they were pleasantly surprised by the quick application process and vast no-fee ATM options.
“I know Chase isn’t charging the $5 fee yet, but it’s just matter of time,” Mindy added. “I’d rather get out before that happens.”
All credit unions could use new members like Mindy and Dan, but unfortunately, they can’t speak for an entire generation. For other Gen Y-ers, supporting a movement isn’t a compelling enough reason to leave their banks for CUs.
Peter, a former classmate, is a U.S. Bank customer, and he feels the bank has treated him well. The institution sent him a letter stating it would not be charging usage fees, and in one case, the bank gladly reversed a large overdraft. So, after researching a few credit unions, Peter decided not to switch.
That could change, however. “The moment they start charging me usage fees, I will start looking at local credit unions,” he explained.
Now is an ideal time for credit unions to capture new, young members. Gen Y-ers need a compelling reason to make the switch, and talk of fees at big banks has given them one.
But before they take the plunge, they need to know that setting up their new CU accounts will be convenient, quick and easy. They want to make sure that by joining a CU, they won’t be missing out on something important, such as a large number of no-fee ATMs. It’s up to credit unions to relay those messages that could make a big difference in whether young bank customers decide to switch or stay put.