Further Proof Free Checking Is Here To Stay
My chances of being right about the future of free checking have just improved.
If you’re a faithful reader of my ACTON Marketing blogs you might remember that for the past couple of years I’ve been ranting and raving from atop my soapbox that free checking isn’t going away anytime soon.
In fact, I believe the free checking account will be with us far into the future which is excellent news for millions of consumers in America…not to mention the banks and credit unions offering it.
As a former free checking client of ACTON Marketing for many years, I saw firsthand its value not only to my former bank but to a large majority of our checking customers. And given the economic climate today, free checking provides greater value than most of the other checking accounts being offered.
What got me on my soapbox in the first place was a growing number of media articles, both online and in the newspapers, where an assortment of banking consultants, pundits, financial writers, and bank executives were predicting the death of the free checking account.
The genesis of these dire predictions was the change in overdraft protection rules and regulations under Regulation E which went into effect in July and August of this year. The perceived loss of billions of dollars in overdraft fee income was motivating all these experts to predict the end of free checking as banks and credit unions would be rushing to replace this lost fee income with higher fees and minimum balance requirements on all checking accounts.
In other words, let’s throw the baby out with the bathwater.
I perceived this as a knee-jerk reaction then and continue to do so today.
And now, I’ve come across an interesting bit of information that gives my prediction greater credibility – at least I believe so. It appears in a brief article on page 16 in the November 12, 2010 issue of The Week magazine.
The article by Jonah Lehrer of The Wall Street Journal is about research conducted by University of California psychologist Philip Tetlock. Mr. Tetlock has spent the last 25 years monitoring the predictions of an assortment of experts. His study is based on the predictions made by 284 prominent economists, foreign-policy specialists, and journalists whose opinions are widely reported.
According to Lehrer, “When the results were in on 82,000 predictions, the vast majority of experts ‘performed worse than random chance,’ with an accuracy rate below 50 percent.” Adding insult to injury, Tetlock discovered that the most famous experts “tended to do the worst.”
Tetlock blames their poor prediction record on “confirmation bias” which means the experts tend to ignore evidence and information that contradicts their beliefs. And the more famous the expert, the more likely he or she is to ignore evidence to the contrary.
As you might imagine, I’m a bit excited about discovering this information.
From my perspective, it means that all these expert predictions about the pending demise of free checking have a less than 50% chance of being accurate while my lone prediction about the staying power of free checking has been elevated to above 50% — hopefully way, way above 50%.
You see, I don’t consider myself in the same league as all the experts mentioned above. Nothing that I’ve predicted about free checking has appeared in a major newspaper or on a widely read website like The Huffington Post. I’m more like the lone wolf baying in the woods at night. This should dramatically improve my odds of being right.
And I’m sticking to my prediction that free checking will not only survive the assault from the mega-banks and a few financial consultants, it will continue to flourish in the hands of the community banks and local credit unions.