How to break up with your bank

Bank customer uses ATM machine.


Tess Vigeland: Dozens of you have written to us with tales of egregious fees, bad customer service and just a generalized fury over bailouts and bonuses. You're mad as hell at your bank and you're not gonna take it anymore! In fact, the Better Business Bureau says complaints against banks jumped 42 percent last year.

So, you're leaving. But do you know what you're doing? If not, we've got some advice from Noreen Perrotta. She's the financial editor for Consumer Reports and she tells us there is a right way to switch.

NOREEN Perrotta: How you start is you decide what you need from your bank. Most people will need a basic checking account with a debit card, you'll probably want to have a linked savings account as well. You may also need to borrow -- you may need a mortgage, you may need an auto loan. So you have to evaluate a. how much the banks are going to pay you for your deposit, how much they're going to pay on your money; b. how much they're going to charge you for these services that you need, and, if you're borrowing, what you're going to pay them for the loans. And it's all over the place.

Vigeland: Now, I have mentioned on this program that I am in the middle of switching banks. Can you go through some of the other things that you have to make sure are in operating order, so that your financial life doesn't go into upheaval?

Perrotta: Yes, yes. You have to switch your direct deposit, if you have your pay check or your Social Security check deposited directly into your checking account -- you need to switch that first. Certainly, your automatic payments you may want to move to a manual system until you complete the switch. Some banks have switch kits; they'll help you facilitate all the transfer, which I would encourage you to ask about that, if your new bank has that.

Vigeland: That's a good idea. I will do that.

Perrotta: And another thing that people don't think about, and maybe you should think about, this is when you're taking money out of a bank, you may lose some accrued interest, if you take it before it's actually posted to your account. Even at these nominal interest rates, you don't want to leave any money on the table.

Vigeland: And what about the difference between banks and credit unions. Can you just run that through for us very quickly?

Perrotta: Well, OK, a credit union is like a collective. It's owned by its members. They don't have shareholders, as I said, they're owned by the members, so there's no huge executive structures, where a lot of high-paid people at the top are taking some of your money.

Vigeland: Sure.

Perrotta: They frequently offer the best loan rates on car loans and mortgages. On credit cards, the limit is something like 18 percent for a credit union card.

Vigeland: You know, we've mentioned that people are running away from lots of specific issues -- overdraft fees, annual charges for debit cards -- are things really better elsewhere? Or maybe the good guys enact these too, once you switch?

Perrotta: Well, it can happen. There's no way to know a. that your bank will stick around or not merge with another bank or b. that they won't need to start imposing fees if they run into some financial shortfall.

Vigeland: Yeah. Do you think being mad at your bank is good enough reason to switch?

Perrotta: Well, it depends how mad and what you're mad about. If you're mad about the Wall Street bail out, I personally wouldn't move on that account, and I haven't. I do have money in a major bank, basically, because it's so widely inconvenient for me to move, and I haven't personally been mistreated by them. If I thought that the bank was screwing me in some way, I would definitely move. And that kind of anger, you really need to vote with your feet when you feel like you're being taken advantage of.

Vigeland: Noreen Perrotta is finance editor at Consumer Reports, and we've been talking about how to move your money. Thanks so much for your help.

Perrotta: Thank you very much.

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We have been working hard and have joined the movement to help people see there are other choices to move their money. In our case we are advocating credit unions.

Credit unions are the new cool but largely misunderstood.

Credit unions are all about the community and giving back to their member owners. They are owned by the people and for the people... not just an elite few shareholders.

There is a great video contest in the voting stages right now to complement the Move Your Money campaign and show the power of credit unions and people helping people: http://www.youngfreehq.com/blog/music-video-contest-entry-8-james-robert...

I've had it with the big banks. They, and many of the financials' seemingly insatiable greed are what brought our global economy to be teetering toward collapse. If they hadn't made so many risky loans, such as those in the subprime category, we wouldn't be in this mess. Instead they fleece the public to pay for their mistakes with these massive bailouts and the CEOs still pay themselves huge bonuses with the money.
The residential housing market is only the tip of the iceberg. Commercial real estate is supposed to go down next and when the $531 trillion of unstable debt in the unregulated derivatives market goes bad say goodnight to capitalism!

I was recently charged a NSF fee of $35. When I pointed out that I had money in my account I was told the deposit was made 4 hours after the ATM withdrawal was made. I told them I'll keep my account open but take my money elsewhere. They gave me a $17.50 refund. I pointed out that I deposit a lot of money into my account monthly and they will not see it again. They said they would miss my business, but could do no more. I told them $17.50 was neither here nor there to me, but if after 25 years that is as much value they put on my business, they wouldn't really miss my money. So, I put it in a small internet bank which pays 10 times the interest rate my old bank does, no ATM fees, free online bill pay, 3 refunds monthly of ATM fees charged by other banks.

My bank sent me a little note I almost missed, they have decided to charge a fee of $8 a month for the pleasure of me giving them my money to hold. I said no thank you and close it out. I have a credit union were I keep most of my money and now I will be keeping all my money here

When you give banks your money,you are making them a loan. How they managed to leverage that into "we're charging you fees for loaning us money" has to be the scam of the century. You've made them a loan and you receive an interest rate that does not keep up with inflation - after which, the bank taxes you for your transactions. Find your way into a Credit Union. I have never regretted giving up on banks.

I don't think we should generalize about 9,000 plus banks in the US. Some have clearly abused the public trust by charging fees such as that noted by Mr. Larsen above. The banks engaging in that practice included most large banks, many but not all small banks, and many credit unions. What you do get with a small bank is greater access to a decision maker for accountability, more personal service and quite often, better rates and fees. Small banks are also often more up to date on technology than people think. What you don't get is the convenience of a branch and ATM on every corner and the cutting edge in terms of technology. I bank with a larger community bank because I like the mix they offer, but if broad based convenience is your number one thing, a big bank may still be the best solution.

I'm pretty sure I've decided to leave my bank. I was just charged an overdraft fee on a $3.00 overgdraft that was over 30.00. That would be what, a 1000% interest rate on a loan of less than 1 day. Grrrrrr. Then when I told them I was thinking of leaving they said they were sorry I've decided to do that and that they've made me aware of the fees...and that was it. I guess they don't want customers.

I would have agreed that credit unions are a better way to go than banks until about 2 months ago. We've used a credit union for 20+ years and were extremely satisfied; two months ago our credit union merged with another credit union and the fee structure was one of the worst I've seen. So we are in the process of switching to a bank.

Banks ARE causing more problems than they solve for many, many people. Part of it is policy, but an equal part is sheer incompetence. They can't seem to get the simplest thing right any more.

My answer is: Go to the credit unions. I have never, ever had any problem of any kind caused by the credit union I have used for more than 20 years. I have taken loans from them, always at rates lower than any bank. I use their line-of-credit plan for overdraft protection (no fees, a reasonable rate, and easy pay-off) If I have a question, I call and a real person picks up the phone.

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