Survey: Banks Are More Frightening Than Criminals For Many

A recent survey indicates that consumers are five times more likely to switch banks because of hidden fees than security concerns, according to the survey conducted by the Gartner consulting firm. And one in six U.S. adult consumers—an estimated 28 million people—said unexpected fees make them more upset or aggravated than having their financial accounts taken over or used by a thief.

In the era of stiff competition and free checking accounts, penalty fees have become an increasingly important source of revenue for banks. About half of bank profits now come from fees—exceeding profits from credit cards, mortgages and all other interest income—according to the research firm R.K. Hammer. According to SNL Financial, banks collect annual fees in the range of approximately $30-32 billion, with the bulk of that amount coming from overdraft fees or what were once known as “bounced check fees". Many financial institutions charge fees ranging from $25 to $49 per incidence.

As consumers use debit cards linked to their checking accounts more frequently—and in more complicated ways -- combined with the challenges of a languishing and mediocre economy -- the chances of overdrawing their accounts have dramatically increased.

Consumers making purchases with debit cards or withdrawing money from an ATM can now easily push their accounts into the red. In fact, according to the Center for Responsible Lending, most “bounced check” charges now arise from debit purchases or other electronic transactions.