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Leave Your Too-Big-To-Fail Bank to Fail

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Switch to a local credit union as part of Bank Transfer Day

by Brian Leubitz

I’ll admit it. I’ve been a customer of a certain too-big-to-fail bank that recently backed down from a debit card fee recently.  I’ve had an account with them since I was 12. Well, that isn’t totally accurate, my account was in one of the predecessors to Nations Bank which eventually became Bank Of America. But, you know, I’ve been lazy for a long time, and it is probably well past time that I do a little searching on my own.

Of course, I was inspired by the #OWS movement, (and an email from the Burnt Orange Report folks) but now seems like a good time anyway.  And, the PCCC’s Banxodus campaign even will help you find a local credit union.  And there are many reasons to find a credit union:

Not-for-profit credit unions are owned by their members. These banks aren’t under pressure by Wall Street investors to maximize quarterly returns. Instead, profits go back to the members in the form of higher interest on savings and lower interest on loans, mortgages, and credit card balances.

The same is not true in the world of for-profit corporate banking. Just look at the chart on the left showing the tremendous consolidation of the consumer banking industry in the last 20 years. These big banks think they can get away with charging you exorbitant interest or excessive fees because you don’t have a choice. Well, you do have a choice, and that choice is a credit union that meets your needs.

A wide range of financial planners and media outlets agree: credit unions are better for your money. Here’s why:

1. Fewer fees, more savings. The Credit Union National Association estimates that consumers save more than $6 billion a year in better rates and lower fees by using credit unions. That’s your money — who should make a profit off of it, you or your bank? — ABC News

2. Credit cards with lower interest rates.  Federal law prohibits federal credit unions from charging interest rates above 18%. Credit union customers pay, on average, 20% less in credit card interest. — Forbes

3. Better customer service. 70% of credit union members feel that the institution put the customer’s interests ahead of the institution itself. The highest big bank, Wells Fargo, came in at a 40% positive rating. —Forbes

4. No penalties for using or not using your money. Corporate banks routinely charge you to open a checking account, charge you if your account is dormant, charge you if your balance drops below a certain level. It’s crazy! Credit unions simply do not engage in these kinds of practices — practices that are focused on driving up quarterly profits, regardless of customer satisfaction. — MSN Money

5. Your money stays in your community. Credit unions primarily employ people locally, and give back generously as well. Local credit unions are also more likely to give loans to local businesses, especially women- and minority-owned businesses. Since the recession began, credit unions have vastly expanded their business loan operations, which helps keep funds working in the local community. — Businessweek (Burnt Orange Report)

So, with that, I went online to find a credit union that works for me. I’m leaning towards SF Fire, but there are probably several right within your community to choose from. Banxodus will help you find one that works for you, or if the data isn’t there, you can help your neighbors by doing a bit of crowd-sourced research.  Either way, now is a splendid time to tell your Big BankTM to take a hike.

Officially, Bank Transfer Day is Saturday, but I’m sure nobody would hold it against you if you acted a bit early.

8 thoughts on “Leave Your Too-Big-To-Fail Bank to Fail”

  1. I left the same too-big-to-fail bank years ago over customer service issues. I cancelled my credit card with them for the same reason.

    They’d issue the statement, then hide it in a secluded vault somewhere off-planet for 10-14 days. And then mail it. By the time it reached me, I had 1-2 days to mail a check to avoid late fees. Not only were they making extra money on all the late fees, they were damaging my credit. When I called to see why this suddenly started happening and what I could do about it, they were clearly uninterested in fixing the problem.

    Now I realize these banks are not only hurting customers, they’re ruining the economy and our system of democracy.

    I saw an article today about how these big banks are refusing loans to credit-worthy small businesses. That’s also not new. A manager at the small, local bank I use told me in 2009 that a small chain of health-food stores wanted to expand–creating local jobs. They’d gotten loan approval from a big bank, signed leases and construction agreements, and then the bank pulled their loan. Desperate, they came to her. As she explained to me, smaller banks like the one she works for have limits on how much they can lend. She couldn’t replace the cancelled loan. So she put together a consortium of local banks and credit unions for a lending package.

    Needless to say, my business account is also with this small, local bank. Has been for 16 years. My fees are lower than with the big banks. And the service is so much better you wouldn’t believe it. I recently refinanced my home because the same too-big-to-fail bank had bought out the lender who held my home equity line of credit–and cancelled it, despite on-time payments over the amounts due. The hoops I had to jump through for the new loan were amazing! But my local bank was great in helping me pull together everything I needed. Many times they’d have it by the end of the same day. BofA never would have done that.

    So small business owners, I encourage you to support banks that invest in you and in growing our economy, and move your money too. Fred Keeley, treasurer of Santa Cruz County, moved the county’s money into local banks–explaining that they were more likely to invest it in local businesses. Ask your county treasurer to do the same.

    Labor unions and churches are moving their money too, for different reasons. They realize that, by buying government officials, big banks are trying to subvert democracy. They know this will be bad for their members. So they’re pulling their support too.

    I did it 16 years ago and I’ve never regretted it. Do it today. Do it on Monday. I don’t care. But do it soon. You’ll be glad you did.

  2. they give me free checks, free cashiers checks, and an ability to mail and transfer payments for free. viva capitLISM

  4. But small banks funnel their excess funds into larger regional and national banks where the fuds can be invested in large projects.  It’s totally circular.  They won’t invest in local projects just because they have funds.

    This has always been true and always will be true.  THis is certainly a noble effort but it won’t change anything, except that depositors get a lower net rate.

    A Former Executive of a Very Large Bank Holding Company.

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