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Remember Nov. 5: Bank Transfer Day
Bank Transfer Day founder Kristen Christian.
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Tess Vigeland: We've been talking for a few weeks now about the customer anger over new bank fees.
In fact, we recently coached you through how to move your money if that's what you decide to do. Well banks certainly are not having a good time these days. The Occupy Wall Street protests are still going strong. And then there's the social media-inspired event Bank Transfer Day. The goal of the event: To make Nov. 5 a day where everyone moves their money from a big bank to a smaller institution or credit union. While the aims are pretty high, it was started by a very unlikely person: 27-year-old art gallery owner Kristen Christian.
And I met with her at a quaint little coffee shop near our Los Angeles studio. Kristen, thanks for meeting us today.
Kristen Christian: Thank you.
Vigeland: Before we start, we were hoping originally to talk to you at your place of work. But tell us why you've decided that that's not a good idea at this point.
Christian: The movement has received a very significant response. Unfortunately, there are several websites that I cannot take down the address to my business and we have had a couple of opponents who responded very strongly. And for my own personal safety, it'd be better to not be at that location.
Vigeland: What were they opposing?
Christian: I think the general fear is people will tuck their money under their mattress. I'm encouraging a shift from a corporate level to a local level.
Vigeland: Well take us back a couple of weeks ago to when you created an event on Facebook and basically that was then publicized to your Facebook friends. What happened from there?
Christian: Well, I created the event outline to 500 of my friends, why I was making the switch. The event currently has nearly 60,000 followers and we've been growing by 5,000 to 10,000 a day.
Vigeland: What sparked this for you?
Christian: Well, after 13 years of abuse by Bank of America, everything from severe fees for a severe lack of services to having my funds frozen at any given moment. The final straw came when my former supervisor posted to his Facebook page, as a status, "Bank of America's charging $5."
Vigeland: And that was the $5 fee for debit cards.
Christian: Mmhmm. I don't tend to just believe what I read. So I did call a representative and spoke to them and asked them for the exact details of this new fee structure. And I was very disappointed, to say the least. At that point, I began researching. When I found credit unions, I was floored. Lower rates, any fees to join usually go to charity -- they really do make an effort to reinvest in local communities both through charities and through offering low-interest rate loans to independent citizens and small-to-medium size businesses.
Vigeland: I know one of the questions that has been asked is whether this is tied to the Occupy Wall Street movement.
Christian: Absolutely in no way. There's been a lot of confusion on that. While I do appreciate the enthusiasm that Occupy Wall Street has put into Bank Transfer Day, I don't personally condone the means of which they approach situations. I don't believe that people should go in large groups to banks to close their accounts, bringing signage and disrespecting the bank employees. Because when you opened your account, I know you didn't have signage and you spoke frankly and respectfully to the employee who assisted you.
Vigeland: How confident are you that Bank Transfer Day will actually result in action?
Christian: There is a likelihood that not every person who RSVPs will in fact move their money. In fact, I believe personally that many of the... Yes, RSVPs are people who are already with credit unions, but at the end of the day, I started this event to educate my close circle of friends. So I definitely believe any dollar transferred from the corporate level to the local level has the opportunity to make a significant, positive impact.
Vigeland: What will you be doing on Nov. 5?
Christian: I've already established my credit union accounts. I actually will be moving my funds on Nov. 4. Nov. 5 I just think is a really good goal deadline. It's definitely not intended to be a run on banks of hundreds of people storming in to close accounts and to get their funds.
Vigeland: Well Kristen, thank you so much for speaking with us and good luck on Nov. 5
Christian: Thank you.
Vigeland: We wanted to get the banking industry's take on all this, so we called up Scott Talbott of the Financial Services Roundtable. He told us all these fees were predicted by the industry after the Card Act was passed last year. And he said if you are unhappy with fees being levied on your accounts, go ahead -- look for another bank.
About the author
Tess Vigeland is the host of Marketplace Money, where she takes a deep dive into why we do what we do with our money. Follow Tess on Twitter @radiotess
Great idea, but I did it a couple of years ago. Unfortunately, my CU's online bill pay sucks like a NASA wind tunnel. So I keep my Wachovia (now Wells F**kgo) account for monthly bills, and I get super de luxe freebie checking because I have $8000 on deposit ... in a couple of conventional IRAs. Neat trick?
I understand the hassle of transferring bill pay to another bank. But I look at it as a way to go over the things I am paying for each month. It is good to review. And often we set things up and then just let it go for too long. So, reviewing is good to look at it occasionally.
Mr. Mack, your statement re: community banks vs. TBTF banks is not completely correct--in fact, some community banks did get way over their head in some ways--that's one reason why the FDIC has closed a fairly large number of banks for the past 4 years (isn't it at least 23 in GA alone?) Some of them are or were "community banks." One of the community banks in my small town was just recovering from almost being closed in 1987 when I moved to the town--its board had been doing too much "crony investing". More recently, it was on the FDIC's troubled bank list for close to a year, before it finally managed to raise enough capital to get off of it.
The source of its almost failure this time? Since it, like many smaller banks, was shut out of the lucrative subprime, exotic home loan market, it made lots of small commercial loans. Again without doing enough due diligence (something banks are supposed to be very good at).
So when lots of small-medium businesses defaulted on those commercial loans, the bank was once again in difficulties.
However, it does not impose the same fees as the TBTF banks do nor was it bailed out as the TBTF banks were and it looks as though Bernanke is going to bail them out yet again via QE 3
Just for the record, Credit Unions can fail too, the NCUA (not a particularly rigorously run organization) performs the same function, in that respect, as the FDIC, here's a list of recently closed CUs: http://creditunionaccess.com/closed_credit_unions.htm or you can go to the NCUA site to see which credit unions have been closed in the past few years.
Two corporate credit unions (provide credit to "natural person" or retail credit unions) had to be placed in conservatorship because of---bad investments in mortgage securities. Or what the TBTF banks weren't shut down or nationalized for investing in (that & derivatives, CDSs, etc.). http://en.wikipedia.org/wiki/Corporate_credit_union
I guess they just weren't TBTF as well as well-connected to Hank Paulson and the Sec'y of the Treasury.
But they also drank the Koolaide.
Some of the retail or "human" credit unions, the ones you & I can join, have or have had to pay higher premiums as a result of the malinvestment "strategies" of those corporate credit unions. My CU is one of them.
I've had most of my money w/a credit union for years. I've had mostly good experiences, w/ about 6-7 months of a pretty bad experience w/one credit union when it decided on a course of expansion (absorbed two other CUs) and service & statement accuracy & readability deteriorated badly. But that was after years of excellent service.
I'm happy with my current credit union.
In order to avoid the upcoming fee that Bank of America will impose on its debit card users, it is not necessary to totally abandon Bank of America. I’ve opened up a checking account with debit card at a bank where previously I only had a savings account. I will keep my Bank of America checking account and all its lovely bill pay benefits but will cancel the B of A debit card and instead, use the no-user-fee debit card from my new checking account. I’ve set up an account on my Bank of America bill pay that will automatically transfer a set amount of money every 2 weeks to fund the new checking account so I can use my new fee-free debit card.
A previous commenter brought up the point that credit unions do not pay taxes. This is a talking point straight from the bank lobby. It is also not true. Credit unions still must pay payroll, sales and property taxes. They are only exempt from federal income tax. Credit unions are member owned and not-for-profit, which means they must use all their income in ways that benefit their members, so the tax benefit goes to lower prices for services and better interest rates for credit union customers. As to the point about the need to raise tax revenue, I am sure the too-big-to-fail banks received much more in taxpayer bailouts and federal reserve subsidies & giveaways than they have ever paid in corporate taxes, and the benefits they receive go to executive compensation, rather than to bank customers.
I wish Public Radio would help people differentiate between a small town Community Bank and a huge Nation-wide Bank. Community Banks are not to blame for the mortgage and economic crisis and will not be uping their debit card fees. Community Banks do a better job of serving their communities, friends and neighbors than Credit Unions do. Also, Mega-sized Credit Unions are not paying federal or state income taxes and Federal Credit Unions don't pay state sales taxes. We are talking about a huge amount of tax avoidance, which is revenue our federal and state programs and budget deficits desparately need. Why is nobody talking about how Credit Unions don't pay income taxes yet a Mutual Bank (publicly owned) does pay income taxes?
I keep hearing how horrible banks are for looking into the debit card fee, and how everyone should move to a credit union etc. No one however, discusses the fact the credit union does not pay taxes, and as such is able to offer a subsidized product lineup. How can it be fair to advocate moving a tax paying entity into a tax free entity during a time when everyone says we need to raise revenue?
I suggest the credit unions are also impacted by the Durbin gift to retailers, who benefit from much lower collection costs since moving from checks to debit cards. As such, if the credit union's were required to pay taxes, would they be chastised as being unfair as well? It seems the banking system is the target de jour but its only fair to make sure you indicate to all that moving to a credit union is moving to a tax sheltered non-paying entity. If they were to pay taxes, you might be shocked to see they cannot provide the same level of service.
There are so many better choices than the big national banks: local banks, online banks in addition to credit unions. It's astonishing that the big banks think they can get away with excessive fees. They must be counting on complete inertia on the part of their depositors. I guess we will see if their bet pays off. Perhaps small, individual depositors are simply a drag on their real business, whatever that is these days.
