SOURCE: TRiG
New Debit Card Fees -- Black Eye or Knockout Punch?
New TRiG Study Finds Nearly One-in-Three Consumers Will Leave Their Bank if It Institutes Charges for Debit Card Payments
FT. WASHINGTON, PA--(Marketwire - Oct 18, 2011) - Perceptions over bail-outs, settlements over fraudulent mortgage practices, increasing fees, removing incentives, stripping rewards programs and a lack of transparency has generated so much mistrust of banks that protesters have taken to picketing and sit-ins. Now, many banks are openly considering charging customers for using their debit card as a form of payment. Such a fee could reach most U.S. consumers, as nearly three-in-four (73%) of all Demand Deposit Accounts (e.g. savings, checking, etc.) has a debit card attached to it. Given this new potential fee, The Research Intelligence Group (TRiG), a market research consulting firm, surveyed a representative sample 1,000 U.S. adults in early October to determine if consumers view this as yet another black eye or the knock-out punch.
Many consumers say this fee could be the knock-out punch. Whether it's the nature of the fee itself -- or the timing of it -- nearly one-in-three consumers (30%) indicate they will leave their bank, should it charge a monthly fee for using their debit cards to make purchases. Consumers that are younger (+/- 35%), come from six-figure income households (37%) and residing in the West (37%) report higher levels of potential flight than their respective counterparts.
It appears that most consumers, however, would view this fee as yet another black eye. More than two-in-five (43%) consumers indicate they would be more likely to change their payment method than to switch banks. Given the recent credit crunch, they express a stronger likelihood to pay with cash (28%) rather than by using their credit card (15%) if banks charged for debit card purchases. Cash purchases would likely grow among middle-age and lower income consumers while seniors and the upper-middle class would be more prone than other cohorts to return to credit cards.
"After a review of our findings, we believe institutions enacting monthly debit card fee for payments will certainly take a hit in the hearts and minds of consumers," says Bruce Shandler, CEO of TRiG. "While much of this anger will unlikely result in switching, these results clearly suggest that institutions with inappropriate communication and service recovery strategies should expect switching to exceed the typical rates of 12%-15% per year, especially given heightened levels of consumer awareness associated with this potential action."
Indeed, a lack of awareness regarding fees consumers pay often dampens frustration expressed towards banks. TRiG's survey confirms this finding. Among those with checking accounts, only 10% believe they pay a monthly fee on their checking account, while the banking industry estimates a majority of consumers, 55%, actually pay such a fee.
Even if this punch does not knock some consumers down, others say it will knock some sense into them and may cause them to actively consider a change.
For more information on this survey and/or to receive a free copy of this report or to discuss another survey with The Research Intelligence Group, please contact Rob Kaplan-Sherman, President, Service Division, at (215) 643-8754 or rkaplansherman@trig-us.com
About TRiG
The Research Intelligence Group is a member of Leger Marketing, the largest independent Canadian-based marketing research company. Leger Marketing and TRiG have maintained their separate identities and independence, which is central to TRiG's core value of providing a specially-selected team of US-based research professionals who have a shared history of bringing their combined experience and knowledge to bear in every research engagement. TRiG's sister organization, Leger Marketing, was founded in 1986 and now has over 600 professionals. Leger provides with TRiG a strong legacy and proud history of world-class professional standards which have continuously earned the prestigious Gold Seal certification from the Marketing Research Industry Association. This legacy of outstanding achievement is foundational to TRiG's mission to provide unparalleled excellence in every aspect of our offering.
