To Credit Union or Not to Credit Union? That is the Question
Today is officially bank transfer day—The day when folk who feel that big banks have gotten too big and too unresponsive move their money to small local banks (less than $1 billion in assets) and credit unions. This has gotten associated with the Occupy Wall Street protests but it began as a separate movement. Do I want to get involved?
First, not to seem too naive, but could moving my money be more than a symbolic gesture? Could it really help make the world a better place?
Second, could I really save money?
Third, what about convenience? Is banking with a credit union or small bank going to make my life harder?
Fourth, how safe is this? Am I going to lose my money?
Fifth, are there really people out there doing this?
Let’s take these points in order.
1. That naive thing. I want to do good by the world but will this really make a difference or is it like a bumper sticker sentiment–it tells what I value but doesn’t really do anything? Will this really show those big corporate banks that they need to change their ways? ….Well, yes and no. The public outcry over Bank of America’s planned $5 fee caused the financial giant to reconsider. But the amount of money the big banks will see slip through their fingers is minimal by their standards. Nonetheless, banks don’t like to lose customers. A big enough exodus will get their attention. More importantly though, the money that credit unions gather gets plowed back into the local community. Think George Bailey’s small credit and loan versus the dreaded Potterville bank. According to the FDIC (here and here) small banks lend more to small businesses. The Move Your Money project says,
Smaller banks do disproportionately more small business lending than the big banks. Small businesses, in turn, are the main engine of job growth, accounting for 65% of new jobs. Banking locally is a great way to support independent businesses and create more jobs in your home town.
2. Saving money. Will changing to a credit union save money? …..Compare but probably yes. The Motley Fool says,
Credit unions are run not-for-profit, and thus are able to deliver substantially higher rates than banks for the same deposits. According to Bank Rate Monitor, the average yield on a money market account is about 1.5% higher at a credit union than the national bank average.
According to a 2009 year study by the Filene Research Institute, the average credit union account holder paid $71.47 in annual fees, compared to $183.14 paid by the typical bank customer.
3. Convenience? I don’t want to be inconvenienced. I don’t want to be searching everywhere for an ATM I can use. Credit Unions are usually only a few branches. How am I going to access my money?…Actually, most credit unions belong to co-op of credit unions that “pool” their atms. The single branch of The Community Credit Union of Southern Humboldt (yes, its acronym is really CCUSH–I’m 90% sure that was an accidental reference to our local product), because of the Co-op Network that it belongs to, actually has more fee-free atms available than Bank of America does.
4. Well what about safety? Is my money going to be insured? …Always ask because some aren’t but 97% are insured to the same standard as most banks are. Be aware that credit unions do fail at a slightly higher rate than banks do.
5. So have other people started transferring money out of big banks and into credit unions?…Oh, yes. The big banks aren’t talking about the amount of customers they’re losing but the credit unions are happily trumpeting some numbers. Mother Jones says,
Credit unions across the country have added upwards of 650,000 new customers since September 29 (the day Bank of America unveiled its now-defunct $5 monthly fee for debit cards), according to a survey of 5,000 credit unions by the Credit Union National Association. The group also estimates that credit unions have added $4.5 billion in new savings since then…
Okay, want to join a credit union? Just go to this Credit Union Locator (this appears to be overtaxed today 11/5) armed with the zip codes of the towns near you. Plug in your zip code. Google the names of the resulting list to see for which ones you are eligible to become a member.
So, I made a list of questions you might want to ask. Remember, not all the answers are going to be yes. You just want to know how your bank compares against the credit union. And how their services stack against your needs.
- Are they insured by NCUA?
- Do they charge for a checking account?
- Do they do automatic deposit?
- Is there a charge for a debit card?
- Do you need to deposit money to open an account? (Usually you need to pay a small sum like $25 to become a member.)
- Do they have online banking?
- Are they a member of Co Op Network?
- Ask what is their policy for non network atms. Some actually waive fees that the other banks charge at their atms.
- Do they have an after hours help line?
- Do they have fee free overdraft protection?
- Do they have a free text message warning when you are close to overdrawing?
- Do they have free smart phone banking (can you deposit a check by photographing it and sending the picture to them?)
Also check and see how the institution is rated here. Four and five star institutions are fine. Anything else is a bit shaky.
Need inspiration? Read this man’s account of his change to a credit union.
Want a step by step break down of what you need to do to make the transfer go smoothly? Go here. (Though one caveat to the suggestions here is that I would open the credit union account and start paying bills before I close my original bank account.) Take your time. In spite of the artificial deadline, you don’t have to rush to move your money. A week or two one way or the other doesn’t matter much.
Also, remember that the hard-working folk at your current bank are not to blame for your disapproval of the corporation they work for. Treat them kindly throughout the process.
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several years ago, B of A indicated that they were going to screw me by raising my interest rate or lowering my credit limit—I don’t remember which. I had several credit cards with fairly high balances left over from building my house and the emergencies of life. I decided to borrow against my car and truck, both of which were paid off, and use the $$ to pay of two big credit card balances. By getting the loans from the credit union of so. hum, I was able to switch the profit made from my loans to my local area. The credit union made money from my vehicle loans twice(they made the original loans). The money came back to my neighbors in the form of loans. Another aspect of this is that the loans then had an end point instead of being ongoing old credit card debt. The loans are now paid off and two large old debt balances no longer haunt me. Our local credit union is a valuable asset—I have been a member since it started.
Oh, I forgot to mention another important aspect. The staff treats me like I’m their friend and neighbor, BECAUSE I AM.
several years ago, B of A indicated that they were going to screw me by raising my interest rate or lowering my credit limit—I don’t remember which. I had several credit cards with fairly high balances left over from building my house and the emergencies of life. I decided to borrow against my car and truck, both of which were paid off, and use the $$ to pay of two big credit card balances. By getting the loans from the credit union of so. hum, I was able to switch the profit made from my loans to my local area. The credit union made money from my vehicle loans twice(they made the original loans). The money came back to my neighbors in the form of loans. Another aspect of this is that the loans then had an end point instead of being ongoing old credit card debt. The loans are now paid off and two large old debt balances no longer haunt me. Our local credit union is a valuable asset—I have been a member since it started.
Oh, I forgot to mention another important aspect. The staff treats me like I’m their friend and neighbor, BECAUSE I AM.
I think it makes a difference. Two years ago I closed an account with Washington Mutual (which is now CHASE). The only reason at the time that I felt compelled to close my account was after seeing banks all over the state doing the infrastructure changes after CHASE bought up some of the other banks like Washington Mutual and it just felt creepy to me. When I went in to close my account a representative asked me why I pulling out, and I just said, “Because you’re just too damn big.”
He replied, “I hear you bro.”
Since then, the Community Credit Union has been great for my family and as far as financial institutions, it’s the closest thing we have towards localizing our money (aside from creating our own currency, bartering, trading, etc) Curley hit some good points above on the other attributes of the Credit Union.
As far as convenience goes– I have come to believe that most things that come as a convenience these days will end up being a great inconvenience for the generations to come. Most modern day conveniences (cars, plastic bags, subsidized industrial food, bottled water, shopping at Costco, etc, etc) are hiding costs that amount to pollution and climate change issues that will be a burden on our grandchildren. I think we should always question convenience. If it seems too good to be true…it probably is.
Kyle
I think it makes a difference. Two years ago I closed an account with Washington Mutual (which is now CHASE). The only reason at the time that I felt compelled to close my account was after seeing banks all over the state doing the infrastructure changes after CHASE bought up some of the other banks like Washington Mutual and it just felt creepy to me. When I went in to close my account a representative asked me why I pulling out, and I just said, “Because you’re just too damn big.”
He replied, “I hear you bro.”
Since then, the Community Credit Union has been great for my family and as far as financial institutions, it’s the closest thing we have towards localizing our money (aside from creating our own currency, bartering, trading, etc) Curley hit some good points above on the other attributes of the Credit Union.
As far as convenience goes– I have come to believe that most things that come as a convenience these days will end up being a great inconvenience for the generations to come. Most modern day conveniences (cars, plastic bags, subsidized industrial food, bottled water, shopping at Costco, etc, etc) are hiding costs that amount to pollution and climate change issues that will be a burden on our grandchildren. I think we should always question convenience. If it seems too good to be true…it probably is.
Kyle
Apparently there has been a significant run on Bank of America. In the billions!
I wasn’t able to find any news on that, other than a report saying that Bank of America is “keeping quiet” about account activity, and their spokesman said “it’s more of an industry-wide thing.”
http://www.cutimes.com/2011/11/05/bank-transfer-day-bank-of-america-quiet-on-account
That article also notes that currently:
Bank of America has 58 million customers, 5,700 branches and 17,750 ATMs, according to the bank’s website. The nation’s approximately 7,600 credit unions have about 92 million members.
Personally I don’t think that Bank of America, or any other bank, is “too big to fail,” but if they are, there’s certainly a remedy for that — make them smaller. Hopefully some of those 58 million Bank fo Amercia customers, and customers of the other “too big to fail” banks, did their part today to help bring that about.
Apparently there has been a significant run on Bank of America. In the billions!
I wasn’t able to find any news on that, other than a report saying that Bank of America is “keeping quiet” about account activity, and their spokesman said “it’s more of an industry-wide thing.”
http://www.cutimes.com/2011/11/05/bank-transfer-day-bank-of-america-quiet-on-account
That article also notes that currently:
Bank of America has 58 million customers, 5,700 branches and 17,750 ATMs, according to the bank’s website. The nation’s approximately 7,600 credit unions have about 92 million members.
Personally I don’t think that Bank of America, or any other bank, is “too big to fail,” but if they are, there’s certainly a remedy for that — make them smaller. Hopefully some of those 58 million Bank fo Amercia customers, and customers of the other “too big to fail” banks, did their part today to help bring that about.
A.P. Giannini is flopping in his grave. Bank Of America was founded as “the peoples bank”, they were the first bank that would loan money to a common man.
A.P. Giannini is flopping in his grave. Bank Of America was founded as “the peoples bank”, they were the first bank that would loan money to a common man.
So why were transfers scheduled for Saturday. Or am I missing something. Seems like a business day would be better to me. But I already use my local credit union which I think just turned 60.
It’s Guy Fawkes Day. Guy Fawkes is the mask that Anonymous uses.
So the day that was picked is a political stunt? Not based on reality that people do banking on weekdays.
They could have picked a better day but then it appears to have gotten a few folk moving and that’s more important.
I keep reminding people to take their time and move their money when it works for them. What day it is doesn’t matter so much as that folk try to find something that works best for them and not passively accept whatever is handed them by big business.
So why were transfers scheduled for Saturday. Or am I missing something. Seems like a business day would be better to me. But I already use my local credit union which I think just turned 60.
It’s Guy Fawkes Day. Guy Fawkes is the mask that Anonymous uses.
So the day that was picked is a political stunt? Not based on reality that people do banking on weekdays.
They could have picked a better day but then it appears to have gotten a few folk moving and that’s more important.
I keep reminding people to take their time and move their money when it works for them. What day it is doesn’t matter so much as that folk try to find something that works best for them and not passively accept whatever is handed them by big business.
H’s mom joined (and also signed him up for a savings acct) with what is now Coast Central Credit Union in the mid-50’s. CCCU is now celebrating it’s 60th year of operation! We pay nothing for our checking acct, have gotten car loans, etc. through them, quickly and at very fair rates, usually better rates than the banks. All in all, we are, and always have been extremely satisfied. As for traditional banks like B of A and WF, we’ve had experience with them too. At the time it was positive, customer service was great and I can’t find fault. However, that was then and this is now. For profit business’ only care about one thing, the bottom line and they need their double digit profits to make the investors happy. Thanks but no thanks, I’m staying with my CU.
H’s mom joined (and also signed him up for a savings acct) with what is now Coast Central Credit Union in the mid-50’s. CCCU is now celebrating it’s 60th year of operation! We pay nothing for our checking acct, have gotten car loans, etc. through them, quickly and at very fair rates, usually better rates than the banks. All in all, we are, and always have been extremely satisfied. As for traditional banks like B of A and WF, we’ve had experience with them too. At the time it was positive, customer service was great and I can’t find fault. However, that was then and this is now. For profit business’ only care about one thing, the bottom line and they need their double digit profits to make the investors happy. Thanks but no thanks, I’m staying with my CU.
I’ve known plenty of people who have moved their money out of the big banks as a show of support and “sticking it to them.” I’ve been with a credit union for longer than I can remember. Wouldn’t dream of banking with the dinosaurs again.
I’ve known plenty of people who have moved their money out of the big banks as a show of support and “sticking it to them.” I’ve been with a credit union for longer than I can remember. Wouldn’t dream of banking with the dinosaurs again.
Fiance here: I switched to credit unions two years ago. I was sick of the big bank bs way back then. I have been totally happy with this decision. With one credit union I get to use my ATM car at 7-11 atms for free. The other is smaller (only 5 employees) and I can call them and tell them to transfer money or get a loan or do anything else. I know all of the employees and they know me.
Fiance here: I switched to credit unions two years ago. I was sick of the big bank bs way back then. I have been totally happy with this decision. With one credit union I get to use my ATM car at 7-11 atms for free. The other is smaller (only 5 employees) and I can call them and tell them to transfer money or get a loan or do anything else. I know all of the employees and they know me.