Bank Transfer Day offers a constructive opportunity for meaningful political action and change, even for those who aren’t braving cold weather and the threat of arrest with the Occupy Wall Street protesters. Begun by Kristen Christian, a southern California art gallery owner, the Bank Transfer Day Facebook page now has over 33,000 Likes and is receiving increasing attention from the press.
The idea? Close your big name bank account and switch to a credit union or small bank on or before Saturday, November 5th. Since passage of the Durbin Amendment, many big banks have increased fees, and a number of them tried to implement debit card usage fees before a public outcry forced them to back down. The rescinded debit usage fees offer little respite, however: Accountholders at these banks have seen monthly maintenance fees increase radically even as the requirements to waive those fees became more stringent.
The difference with credit unions
In contrast to big name banks, many credit unions and smaller for-profit banks have strikingly low fees, frequently offering free checking and debit card use. Nonprofit credit unions also tend to have highly competitive interest rates because they funnel profits back to members in the form of better rates and lower fees. Switching to a credit union goes a long way toward keeping your money local, and many of these financial institutions are very involved in their communities. Among other things, many offer free classes to educate members about finance, sponsor community projects, or run organizations to help underserved community-members gain financial freedom.
While there are plenty of compelling reasons to switch from a big name bank to something more local, many people are put off by the perceived hassle of taking this step. Spotting an opportunity, credit unions are stepping up efforts to allay concerns, offering extended hours this Saturday and staffing call centers to prepare for what may turn out to be an onslaught of new members.
A boon for CUs
For credit unions, the banking ruckus created by the Durbin Amendment and the current excitement over Bank Transfer Day spell opportunity. Because the Durbin Amendment exempts institutions with less than $10 billion in assets, most credit unions aren’t subject to the new restrictions on interchange fees, and as nonprofit banks, they’re built on a different banking model and are already geared toward member-focused benefits. On top of all this, many credit unions now offer the same types of perks that their big name counterparts do. You can get e-statements, pay bills online, and reach tellers over the phone or Internet for account assistance.
Still, credit unions only serve about 6 percent of US consumers, and this number has remained steady over the past few decades. Whether credit unions will take full advantage of Bank Transfer Day and the prevailing consumer dissatisfaction with mainstream banks will be a big test of CU smarts.
But even as they take advantage of the public’s newfound interest in local banking, credit unions need to play their cards right. With consumers on the hunt for free debit cards and checking, CUs should watch their step as they promote these banking services. When it comes to banking services, too often free isn’t entirely accurate. With the current banking atmosphere of distrust and dissatisfaction, credit unions need to prioritize keeping new members’ trust by being open and upfront about minimum balance requirements, or limits on the number of free PIN-based debit card transactions per month.
For their part, consumers should be aware that not every credit union offers entirely free checking. As with opening any new bank account, asking questions and reading the fine print are requisites. And finally, if you’re just learning about Bank Transfer Day and think it sounds like a great idea, make sure that you’re smart about closing out your old account. It’ll likely take you longer than a few days to ensure that you and your old banking institution have completed and processed the necessary paperwork, but that’s no reason to pass up moving to a financial institution that will value both you and your community.