Switching Financial Institutions Might be Easier than Members Think

By Preston Packer |

Feb

13

The cost of switching is an age-old concept, applying to essentially every industry. Humans are creatures of habit and even when people are aware of a better alternative, they will not switch to a new product or service due to the expense or effort it would require. With something as simple as household products, there is little to no cost of switching. If a shopper routinely buys JIF peanut butter for the kids' PB&J sandwiches, but at the grocery store that week Skippy is on sale, it’s likely they’ll go with the cheaper alternative. The cost of switching here is low... peanut butter is about $2.75 (or $4 if you're a health nut who prefers organic) and if the family doesn’t like the Skippy, they’ll just switch back to JIF next time. However, there are far larger barriers when switching to something like a new cable company, insurance provider, or financial institution. 

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