Transparency in financial services, for the most part, is an oxymoron. The less consumers understand about money and how to manage it, the more banks profit. So, there is a huge incentive for bankers, brokers, financial advisors and the like to be misleading or hide behind a shroud of complexity. This is no secret.
Given that total transparency in the financial services industry, as demanded by vulnerable consumers and a progressive government, is unrealistic, one would think that even a taste of it by its proponents would engender excitement. Apparently, that is not the case. Recently, when banks, led by Bank of America, revealed that they planned to charge customers a $5 monthly fee to use their debit cards, public outrage ensued. So much for moving toward that utopian, consumer-friendly market in which banks actually reveal their fees and choose not to be so conniving!
The fact that banks are now canceling their $5 charge policies seems like a great win for consumers, but in my opinion, it is not for two reasons. First, banks will go back to being less transparent and finding more insidious ways to make their profits. The public outcry over the charge has actually validated, in a way, their notorious, clandestine activities. Second and most importantly, customers are now less likely to join a credit union, a financial institution that focuses on what is best for its members, not for Wall Street. Banks realized, although quite late, that if they proceeded with the charge, they would lose a lot of their deposits and business to credit unions.
In conclusion, when I heard that banks were planning to implement this debit card charge, I rejoiced saying, “What a great opportunity to move consumers from banks to credit unions!” It seems like this will not happen as I had hoped. I doubt another pain point so excruciating and publically detested will surface any time soon and therefore promote the credit union cause. Unfortunately, consumers have once again tricked themselves into believing that the banks have capitulated under pressure and have done the “right thing”. The truth is that the banks will find another clever way to get their money, and it is much easier to do that when you are still their customer.
Read ABC News article.