Banks are losing customers to credit unions, but Millionaires are not likely to take part in the consumer backlash.
An estimated 650,000 Americans switched from banks to credit unions in the month of October and first week of November, but Millionaire investors are not likely to take part in the consumer backlash against big banks.
More than 40,000 customers became members of credit unions on Bank Transfer Day, alone, with four in every five of the largest credit unions signing up new members during the November 5 event, said the Credit Union National Association, an industry advocacy group, in a prepared statement.
Millionaire investors were not likely to be among the consumers flocking to credit unions. A November poll by Millionaire Corner found that 82 percent of investors with a net worth of $1 million or more are not considering changing financial institutions. Millionaires, as a group, tend to prefer using at the nation’s largest banks despite higher fees and the unpopular “too big to fail” bailouts received during the financial crisis.
Of the 18 percent of Millionaires who are considering changing financial institutions, most would go to a member-owned institution such as a credit union, though local and community banks appeal to a significant percentage. About 20 percent are considering changing to a different large national financial institution.
“Millionaires tend to prefer large national financial institutions that can provide many services under one roof,” said Catherine McBreen, president of Millionaire Corner. “They also seek paperless delivery of statements and online access to accounts.”
The top five banks preferred by Millionaires include Bank of America, Wells Fargo, JP Morgan/Chase, PNC and USAA, according to a third quarter 2011 study by Millionaire Corner on the attitudes and behaviors of Millionaire investors.
Less affluent investors –those with a net worth of $100,000 to $500,000 not including primary residence - appear slightly more influenced by the Occupy Wall Street protests. About 72 percent said they are not considering changing banks despite local and national protests aimed at financial institutions. Nearly three-fourths of those who are looking for a change, said they would most likely go to a credit union.
Credit unions are not-for-profit, member-owned institutions. They tend to focus on building relationships with clients and typically charge lower service fees than commercial banks. More than three-fourths of credit unions offer free checking with no strings attached, according to the 2011 Credit Union Checking Study by Bankrate.com. An additional 20 percent will waive the fee if members agree to direct deposit and/or e-statements.
“Together, that’s 96 percent of the credit unions offering checking that is free or can become free with pretty minimal effort,” according to a statement by Greg McBride, senior financial analyst at Bankrate.
A 2010 Bankrate study showed that only 65 percent of commercial banks offered free checking with no strings attached. On the other hand, big banks offer more convenient branch and ATM locations outside the community, and tend to offer the most cutting-edge mobile banking services.