One might think that large banks will lose many of their customers due to the new bank fees and the renewed publicity of the move your money movement which encourages people to move their money to credit unions and community banks. However, banks know most of their customers won't leave. This was highlighted in this New York Times article:
The Internet banking services that have been sold to customers as conveniences, like online bill paying, serve as powerful tethers that keep them from jumping to another institution.
Even with Bank of America's new debit card fee, many people may decide to pay the $5 monthly fee instead of moving their checking account to another bank. A couple of people interviewed in the article said they were mad at the new fees, but they admitted that they would probably stay with Bank of America. One said he had too many online bill paying arrangements to move to another bank. The article quoted a study which shows how online bill payments increase the "stickiness" of accounts:
The 2008 study showed that customers who made five or more payments online a month were 95 percent less likely "to churn," while consumers who didn’t bank online were 43 percent more likely to leave.
Why Banks Give New-Account Bonuses
This shows why banks are willing to offer new-account bonuses. Many bank promotions require not only direct deposit, but also using online bill pay. I just posted on a promotion yesterday that required both direct deposit and online bill pay usage to receive the full bonus. The bank hopes that once you set up online bill payments and direct deposits, you won't easily be able to leave.
This leads me to today's poll question. When you have opened new bank accounts for the bonuses, how long did you keep those accounts opened? Did you close them right after you received the bonuses? Often there are account closure fees if you close an account before 3 or 6 months. So you might want to wait long enough to avoid a closure fee. However, if you are an Average Joe, you will likely keep the account open and you might even start using it.