What ever happened to the idea of SIMPLICITY?

 

With over 30+ years of retail bank marketing experience, I’m still bewildered why most banks and credit unions offer too many checking account choices.

 

What’s wrong with two basic choices – Free and Premium?

 

Where I have my problem is when banks and credit unions offer two or more premium accounts that overlap to the point that it is tough to differentiate between them.

 

This point was driven home the other day while visiting my local credit union to make a deposit.  As I’m prone to do, I walked past the brochure rack to see what’s new.  Spying an updated checking account brochure, I snagged a copy for a closer look.

 

On the inside spread was the helpful comparison matrix listing five different checking account choices.  For some reason, my credit union finds the need to offer two different student accounts – one for students 16 or 17 years old and another for students in the 13 through 17 age range.  Go figure!

 

But student accounts aren’t the point of this blog.  It’s the two overlapping premium accounts that irritate me.

 

Unfortunately, you can’t tell by their names which one is superior to the other.  While “Premium Checking” should be at the top of the prestige pile, my credit union selected “MarketRate Checking” as the top dog.  Personally, I would have made “Premium Checking” number one.

 

Both accounts pay tiered rates but you wouldn’t know it from the matrix.  I only discovered this by going online to check current rates.  Only MarketRate Checking is mentioned as paying tiered rates in the matrix.  Under Premium Checking we’re only told that you’ll earn higher dividends on your balances of $1,000 or more.

 

If both pay tiered rates, why not say so in the matrix?

 

Going down the features and requirements side-by-side, I see that the monthly service charge for MarketRate Checking is $15 while it’s only $5 for Premium Checking.  Ironically, both require a minimum daily balance of $1,000 to earn interest.

 

One major difference in accounts is that it requires a minimum daily balance of $10,000 to avoid the monthly fee with MarketRate Checking and only $1,000 with Premium Checking.  And, with Premium, I also have the options of direct deposit or a combined savings and checking balance of $5,000 to avoid the pesky monthly fee.

 

But here’s the clincher…under Special Features, I learn that the only difference, other than rate tiers, between these accounts is with MarketRate Checking you get your first box of checks free.  And if you select direct deposit, standard checks are free with all orders.

 

Whoopee!

 

Imagine that!  Free checks in a time when consumers are writing fewer checks and using their debit cards on a daily basis.  Today, a box of checks lasts me for several years.

 

As mentioned earlier, I took a quick trip to the credit union website to check on the rates being paid on both checking accounts.

 

I learned that while Premium Checking offers only four different rate tiers, MarketRate Checking offers a mind-numbing six tiers.  Are six tiers really necessary?

 

At today’s rate of 15 basis points on balances between $10,000 and $49,999.99, a customer maintaining an average balance of $15,000 in Premium Checking would earn a staggering $22.50 in interest for the year.  And remember, you have to pay tax on this interest.

 

You’d do a tad bit better by maintaining an average balance of $40,000 in your MarketRate Checking account.  At today’s rate of 80 basis points, you’d earn $320 in interest before taxes.

 

While $320 is nothing to sneeze at, it begs the bigger question.  Why would any sane person keep a $40,000 balance in his or her checking account?  While I’m sure a very few credit union customers do keep these high balances in their account, it begs yet another question.

 

Why offer a high-end checking account that is used by so few customers?  Or more appropriately, used correctly by so few customers.  I’m sure there are a number of checking customers with MarketRate accounts that would be better served by Premium Checking.

 

I’d love to see the credit union’s customer counts and balance distributions in both Premium Checking and MarketRate Checking.  I’m sure there’s a story in these metrics.

 

If I were the new CMO at the credit union, I would immediately look into collapsing the checking product line into three accounts – Free Checking, Premium Checking, and Student Checking.

 

These three accounts should easily serve the checking needs of over 95% of the customers.  The other 5% can go to U.S. Bank where they offer a dazzling selection of seven checking choices – three of which are complicated packaged accounts anchored by checking.

 

I’d love to hear the checking account sales presentation at a U.S. Bank branch.

 

What ever happened to the KISS principle?