To the growing “anger” movements – Tea Party vs. taxes and big government, Occupy Wall Street vs. corporate bailouts and economic inequality – add Bank Transfer Day, a movement triggered largely by new monthly debit card fees that might well result in hundreds of thousands of people pulling their money from the nation’s largest banks.
D-Day for BTD is Nov. 5, the date by which protesters are asked to transfer their funds to smaller community banks and credit unions.
It started as a Facebook page that went viral a few weeks back. With 11 days to go, the page showed 62,067 “attending” (pulling their money), 12,654 “maybe attending” and another 361,867 were “awaiting reply.”
Credit unions that don’t charge monthly fees for debit cards or ATM withdrawals within a shared network have been watching.
And at US Community Credit Union in Nashville, that means staffing up, says Buddy Brent, the credit union’s vice president of development.
“We are in the stages of putting a plan together for that Friday, Nov. 4th and for Saturday, Nov. 5th to actually have enough employees at our branches to accommodate the influx of people that may be making the change,” says Brent, whose credit union serves those who work, live, attend school or worship in Davidson or its contiguous counties.
The Bank Transfer Day page was created by Los Angeles art gallery owner Kristen Christian, and is a part of a larger movement called “Move your Money.” BTD, which is receiving attention from major media outlets such as the Wall Street Journal and The New York Times, contains links to credit unions as an alternative, as well as local banks.
A number of large banks recently began charging monthly fees for debit card use to offset losses from The Durbin Amendment, a last-minute addition to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.
The Durbin Amendment limits card “swipe fees” that banks with more than $10 billion in assets can charge as of Oct. 1. Bank of America compensated with a $5 “use” fee for any month a consumer uses their card, beginning Jan. 1, 2012.
Sun Trust began charging monthly debit card fees earlier this year, while Wells Fargo and JPMorgan Chase are testing the fees in select markets. Regions and First Tennessee also have added card fees. Most of the area’s smaller banks, Avenue, First Bank, Farmers, etc., have not.
The Bank of America move was the last straw for some consumers outraged at bailouts of large banks and what they see as ongoing gouging to line the pockets of executives. The New York Times recently reported that the Federal Reserve reviewed of the country’s 28 largest financial companies in 2010 and found that many of the bonus and incentive programs that economists say led to the financial crisis remained in place.
And though the call to pull money from big banks appears to dovetail with the Occupy Wall Street movement, Bank Transfer Day’s originator claims there is no connection.
Capital Punishment
Michael Martin, Tennessee Credit Union’s CEO and president, says he’s seen an increase in interest, particularly in recent weeks just about the time BTD organizers issued a directive to make Nov. 5 “a day the banks will remember.”
“I am told there’s been a lot of interest, a lot of phone calls by people wanting to know if they are eligible to join the credit union,” Martin says. “We have seen an increase in both new accounts and new checking accounts, particularly in the last month.”
Because credit unions are not-for-profit, they are deemed to be more accountable to owners (shareholders). As well, they offer competitive services that some large banks no longer offer, such as small loans. Surplus income is returned to members in the form of dividends and lower loan rates.
“We don’t have to generate money for stockholders,” Martin says. “Of course, we have to make money like any financial institution does, but our overhead is a lot lower.
“We operate for the benefit of our members, who are owners of the credit union, and every member regardless of their balance has an equal say. Credit unions are historically designed to provide financial services at reasonable prices.”
Bank of America spokesperson Anne Pace says consumers would be smart to investigate fully what other banks charge before pulling their money.
Considering a change?
Here’s what to look for:
- Compare rates, fees and services at credit unions and community banks to larger banks.
- Ask about free checking and debit. About 80 percent of credit unions still offer free checking, and more than 70 percent have debit card programs, typically with no fees.
- Consider the convenience factor. Credit unions and smaller banks have fewer branches, but thousands of credit unions share their branch facilities. Many community banks reimburse fees incurred using other banks’ ATMs.
- Ask about deposit insurance. Nearly all of the 7,500 credit unions in the U.S. are federally insured.
- Ask about electronic services.
- Request a “switch kit.” Many credit unions and community banks have switch kits, a compilation of all of the forms, rules and suggestions you may need to make your switch.
“If you are considering switching a bank, for a customer, you have really got to look at the choice carefully, because there may be fees that they are not aware of with other institutions like foreign ATM fees (ATMs not operated by their bank),” Pace says. “So, somebody may live in a certain town and decide to move to that bank, but they may work somewhere else in the city and there are no ATMs there. That’s an example, but really customers really need to look closely and make sure they are making a decision that works for them.”
Most credit unions are part of large credit union networks, so finding an ATM is generally not as difficult as it might seem. Larger banks do, however, have more branches.
And though credit unions may offer cheaper rates, transferring funds might be time intensive, particularly if a consumer uses direct deposits and automated bill paying. Those and other online conveniences have been featured in a recent Bank of America’s national television campaign.
Still, Brent says, personal service makes members of credit unions “members for life.” He says his institution offers services for struggling members.
“We have what we call an Excel program for someone that is actually struggling to get by or has debt,” Brent says. “We will work with them by putting them on a debt management plan. We will actually call their creditors to see if we can get their interest rates reduced, and we pay for all members to use that.”
One Nashvillian getting ready to leave Bank of America is Nikki Baker, program director at PENCIL Foundation in Nashville.
“I am planning on closing my account after my next paycheck comes in,” Baker says. “At PENCIL, we can join Cornerstone Financial Credit Union, so I plan to open an account there. I’ve been with Bank of America for 17 years. I think it’s absolutely ridiculous to charge customers to spend their own money. I have a feeling I will be one of many that says ‘enough’ to corporate greed.”
Civic Bank & Trust in Green Hills, now in its sixth year, is certainly willing to take up the slack on Nov. 5. The bank has one branch and one owner, Robert Perry, a longtime attorney in Cheatham County who represented community banks. Perry says he’s been seeing an increase in deposits over the last “two-to-three weeks.” Because the bank is so small, Civic doesn’t don’t fall under the requirements of the Durbin Amendment.
“All our decisions about who to loan money to and what terms and how much to pay on deposit accounts, those decisions are made inside this building,” Perry says. “You are talking to the world headquarters of Civic Bank & Trust. We have seen some deposit increase from some of the larger banks.”
Perry believes community banks are making a comeback because as a “small ship” his bank can navigate more quickly than large banks that have wait for decisions that have been farmed out. As well, Civic repays ATM fees in full, no matter what the cost or where the transaction takes place.
“This is just something that I think is an integral part of a community to have a local banker somebody who, when you walk in the door knows who you are. We make the decisions right here,” Perry says. “We don’t have to wait on somebody in some other city in the country.”
The Tennessee Bankers Association is urging consumers to look at all of the products their current banks offer before going to the trouble of pulling money. Colin Barrett, senior vice president and chief administrative officer of the association, has been following BTD and its grassroots predecessor.
“We’ve been following the ‘move your money’ movement, and our message is we believe that you should shop, as with anything that you are going to purchase,” Barrett says. “And you should shop internally to make sure that your have the best account possible that fits your needs.”
Credit unions are not the only financial institutions that give back to the community, albeit in a less direct manner, Barrett adds.
“We are obviously very pro bank,” Barrett says. “Banks are not credit unions in the fact that our members pay taxes, and those go to support the local economy and government, and I understand how the credit unions are looking at it, but the vast majority of banks in Tennessee do not charge fees for accounts.”
However, they do charge for “foreign” ATM withdrawals. For example, U.S. Bank charges $2.50 to withdraw money from an ATM machine at a Mapco. So does Mapco, bringing the total transaction fee to $5.
As for Bank of America, the most visible target of the movement, Pace encourages clients to look at the bigger picture.
“We continue to be a great place for consumers to manage their everyday finances and achieve their savings goals,” Pace says in a prepared statement. “We offer customers more choice and convenience, including industry-leading fraud protection, access to thousands of banking centers and ATMs, and the best online and mobile banking, which allows customers to bank on their terms.”
Brent agrees, saying credit unions have not remained in the dark regarding online conveniences such as bill-paying – many offer the service – and some have shared service centers that number in the thousands. Tennessee Credit Union has roughly 6,700 shared service centers in the country. US Community Bank has around 4,400.
“If you are traveling, there’s a shared service center in that town, and you’ll be able to walk into that center and conduct business there just as if you were right here in Nashville,” Brent says.