Bank fees prompt more to open accounts elsewhere, study says

— -- New fees led to an increase in the number of customers who switched banks in 2011, according to a J.D. Power and Associates survey released Monday.

Of consumers surveyed, 9.6% switched banks in 2011, up from 8.7% in 2010, according to the Westlake Village, Calif., research firm. A third of those who switched cited fees as the reason for making the move.

"When banks announce the implementation of new fees, public reaction can be quite volatile and result in customers voting with their feet," says Michael Beird, director of J.D. Power's banking services practice.

Smaller banks and credit unions are benefiting from customer turnover, acquiring 10.3% of new customers in the past year, up 2.2 percentage points from 2010. In addition, customers are more loyal to small banks and credit unions, the survey found. Together, they averaged a 0.9% defection rate compared to between 10% and 11.3% for big, regional and mid-sized banks.

A separate survey released in January by San Francisco-based Javelin Strategy & Research estimated that 5.6 million bank customers changed providers in the last three months of 2011, with about 25% of those customers citing new fees as the reason for the switch.

Eleven percent said Bank Transfer Day, a grassroots campaign designed to encourage bank customers to switch to small banks or credit unions, was the reason for their decision to move. The Nov. 5 event was launched after Bank of America announced plans to charge customers $5 a month to use their debit cards. Bank of America and other banks later rescinded those fees in response to protests from consumers.