Bethpage Federal Credit Union, New York’s largest credit union, released a study earlier this month that revealed that consumers increasingly stress the importance of free checking with no hidden fees when choosing where to bank.
The credit union commissioned the study to determine the impact of the institution’s 2011 Bank Transfer Day, a grassroots protest of unfair bank practices that occurred last November. In the 11 months following Bank Transfer Day last year, Bethpage saw a 68 percent in membership compared to the 11 months prior.
The survey found that 68 percent of respondents list free checking with no hidden requirements as important, and 60 percent of respondents would likely leave their current financial institution if it did not offer free checking without hidden fees.
A recent survey by Bankrate.com found that fees associated with checking accounts are at record highs. According to the survey, the average monthly maintenance fees increased by 25 percent from 2011.
The Bethpage survey also revealed that 37 percent of respondents would leave their current financial institution and opt for an institution that offers lower rates and fees.
“As we see bank fees continue to soar to unprecedented highs, those strong demands will continue and consumers will not only express their discontent but continue to make changes in where they do their banking,” Kirk Kordeleski, the president and CEO of Bethpage, said.
The existence of free checking has been threatened as a result of the 2010 Dodd-Frank Act, particularly the Durbin Amendment. The provision capped the amount that banks could charge merchants to process a debit transaction, leading to massive revenue losses. In order to recoup the losses, banks began charging fees in other areas, including checking accounts.
Before Dodd-Frank and the Durbin Amendment, a 2009 Bankrate survey revealed that 76 percent of banks offered free checking with no minimum balance. The 2012 survey, however, found that only 39 percent of banks offer free non-interest checking with no mimumum balance.
John Berlau, a senior fellow for finance and access to capital at the Competitive Enterprise Institute, said that there will likely be little relief from the provision.
“While competition is the American way, and it is always good for consumers to look around and see if they can get a better deal from another bank or credit union, there will likely be no escaping the deadweight loss of [the Durbin Amendment],” Berlau said, according to OpenMarket.org.