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Credit unions gain at banks' expense
Protesters associated with Occupy Wall Street march past a Citibank branch in Manhattan on October 28, 2011 in New York City. Hundreds of protesters delivered 6,000 letters from angry bank customers to the headquarters of Bank of America, Morgan Stanley, Wells Fargo, Citigroup and JP Morgan Chase during the march.
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Kai Ryssdal: Shares of Bank of America tumbled today. Shareholders weren't happy about its plan to issue new stock to bump up capital reserves. A lot of account holders aren't happy with B of A either. Which is -- in part -- why tomorrow has been proclaimed Bank Transfer Day. It was so designated by a Bank of America customer here in Los Angeles angry about the bank's infamous and now-rescinded $5-a-month debit card fee.
The idea is for people to abandon big banks for smaller more local institutions. And as a result credit unions, those sleepy not-for-profit cooperatives, are flush with $4.5 billion in new deposits.
Marketplace's Stacey Vanek Smith has more on the money migration.
Stacey Vanek-Smith: The debit card fee Bank of America and other big banks rolled out ignited an uproar.
Melissa Wilson: The $5 debit card use fee was sort of my last straw.
Thirty-three-year-old business-analyst Melissa Wilson is a Bank of America customer. Well, she was. The debit card fee made her so angry she left B of A -- and even when the bank nixed the fee, she didn't look back.
Wilson: It's just too little too late. The fact they even tried to do it was enough for me.
Between debit fees and Occupy Wall Street, Community banks and credit unions smell opportunity.
Advertisement: We'll let the big banks take care of Wall Street. We'll be right here taking care of main street. Own your money, join a credit union.
Credit unions are extending hours and creating "switch kits" -- step-by-step guides to leaving your bank. Bill Cheney is president of the Credit Union National Association.
Bill Cheney: We've heard from credit unions all across the country that they've seen an increase in business. We've heard anywhere from double their normal account value to five times as much.
Cheney's organization reports that since Bank of America unveiled its debit card fee, 650,000 people have joined credit unions -- that's more new accounts in six weeks than credit unions registered all of last year.
Taylor Overstreet: Among my group of friends, people are leaving in droves and joining credit unions.
That's 29-year-old Taylor Overstreet from Austin, Texas. This week, she moved her money from Chase Bank to a local credit union. She wasn't unhappy with Chase, but she wanted to join the movement against big banks.
Overstreet: Friends on Facebook and Twitter talking about switching. I had visited the Occupy Austin website and I think it was bank action day. So, I guess you could say it was effective marketing.
The recent defections to credit unions aren't enough to impact the big guys right now, says analyst Ron Shevlin with the Aite Group. Those banks have millions of accounts and many of the people leaving are young and not the most lucrative customers. Still, Shevlin says, the big banks should be worried.
Ron Shevlin: The impact of Bank Transfer Day shouldn't be thought of in a single day perspective. The bigger impact is 10 to 15 years out.
When those former customers are in their earning prime and banking elsewhere. Not that switching is trouble-free. When she moved her money out of Bank of America, Melissa Wilson forgot to cancel the automatic transfer she'd set up between her checking and savings accounts.
Wilson: It charged me an overdraft fee! For trying to transfer money that wasn't there from one account to another!
Wilson has paid more than $500 in fees to Bank of America this year and says she didn't have the energy to fight the last one. So, she surrendered another $10.
In New York, I'm Stacey Vanek-Smith for Marketplace.
Growing Financial Cooperatives such as Credit Unions are only the beginning of the end of the "occupation." Moving Americans to local ownership and control in many more aspects of our economic life will change and move the national markets to cater to us, rather than exploit us. Food Cooperative Grocery stores are also growing as are worker owned cooperative businesses. It is about more control on a local level that will help to balance out big business and their excesses. It won't ever replace our national economy but will enhance it. In a way it is "natural selection" at work and isn't that what a free market is all about.
After decades with Bank of America, I'm going to fire them. My daughter got caught with a large number of fees after we opened a checking account for going away to college and they made her open a savings account even though she already had at least two existing savings vehicles. Then, sometime down the road, they raised the minimum on that dumb savings account and started charging fees (minimum was $150 and it was doubled to $300). I seem to recall that we had all sorts of backups to not get charged, but one of their marketing pukes figured out a way to deliver the sucker punch. I thought it was weird at the time that we had to open another savings account even though she already had two other savings vehicles in place at the bank. Not weird anymore. The big banks seem to always have a ploy to screw the customer.
The last bank I fired was Chase after they required me to open a checking account to pay a trustee fee on an IRA. They wouldn't even take a crisp $20 bill to pay the fee. Even though it cost me some chump change, I dumped Chase and I'm still happy with that decision.
As a tax payer, you bail out these "too big to fail" banks and they turn around and screw you with fees on these convoluted schemes. These banks can't figure out a way to make an honest buck, but they can figure out lots of ways to screw customers. They must get it from the investment side of the house... you know, sell them crap securities and buy a CDS to cover the bet.
I still bank in another city where I have not even been for 30 years. I have credit and debit cards from them that work fine. I have never been charged a fee for cash withdrawals at ATMs, even overseas. I accumulate credit through online payments so I get certified checks, wire transfers and other premium services free.
I have developed a corresponding relationship with the head of IT so if I ever have a problem I contact her and she fixes it. If there is anything else wrong I call them on a toll-free line and they are completely responsive and helpful.
I can deposit checks and pay bills on line. I would not think of doing business with any of the money-center banks who don't care who I am. I will stick with my credit union for the rest of my life.
