Saturday was ‘Bank Transfer Day.’ Spurred by the $5 debit card fee Bank of American planned to charge customers, a movement was born to get banking customers to switch from big banks to credit unions. Why they planned it on a Saturday when most credit unions are closed is anybody’s guess.
Today in the Washington Post, Ian Shapira writes about the young women supposedly behind the mass exodus from banks. Her name is Molly Katchpole, who is described as a “22-year-old underemployed college grad who ignited a nationwide movement against Bank of America. . . .” Katchpole penned a petition titled, Tell Bank of America: No $5 Debit Card Fees.” Now, I knew this petition and I were not going to get along right from the first few sentences: “When the recession first hit, we gave Bank of America billions of dollars in bailout money. Our reward is higher fees for the same services.”
Actually, our “reward” was $4,571,516,269. That was the profit the country made on our investment (we didn’t “give” B of A anything) into Bank of America as part of the bailout. To be specific, the government purchased preferred stock with warrants.
Now I can just envision the emails I’ll receive–“DR, why are you defending big banks? They must have paid you to write this crap!” As an aside, I can’t tell you how many people have accused me of being paid to write articles about big banks. Apparently, if you don’t join the “movement,” you must have been paid off. Nope. Full disclosure–I don’t bank with BofA, I don’t use its credit or debit cards. And I have absolutely no affiliation with the bank at all.
Here’s the deal. For some reason Bank of America’s $5 debit card fee struck a nerve in our country. In some ways it reminds me of the reaction to Netflix’s price hike. And I think it’s absolutely ridiculous. We pay $5 for a cup of coffee, $15 per ticket to go to the movies (not including snacks), and upwards of $100 or more per month for cable. But even think about a $5 monthly debit card fee, and all hell breaks loose.
On top of that, our representatives in Washington have proven totally ineffective. President Obama has shown a stunning lack of leadership on economic issues, pitting the “rich” against the rest of us rather than uniting the country to solve our financial problems. And both the Republicans and Democrats in the House and Senate are no better.
So what do we do? Start a movement over a $5 monthly fee. Really? That was the best we could come up with? That’s like a passenger on the Titanic complaining about the tea service. I don’t like fees of any kind. But if I were to create a list of the most ridiculous fees and costs many of us face every day, a $5 monthly debit card fee wouldn’t make the top 25. The funny thing is the movement worked. Bank of America announced it won’t be charging the $5 fee.
And that brings me to Bank Transfer Day. Sparked by the $5 fee, organizations like moveon.org are passing out the pitch forks and torches in an effort to get folks to switch to credit unions. Apparently, more than 650,000 have already switched, according to Martha C. White of Time’s MoneyLand blog. I suspect many will regret their move.
Credit unions can be a great banking option. Recently, I published an article about great credit unions based on input from readers of the Dough Roller Newsletter. And in college I kept my money with a credit union. But this could be a case of the grass is always greener on the other side.
Many credit unions have some significant limitations. Most have very few branches, so getting to the bank may prove difficult. Unlike a big bank with 24/7 customer service, credit unions can be impossible to reach during the evenings and weekends. And contrary to popular belief, credit unions do charge fees. In 2010 alone, for example, credit unions charged consumers $13 billion (yes, billion with a b) in fees.
I’m not switching. As I’ve said before, I bank at Citi. I’ve banked with Citi for 20 years. I don’t pay any fees for my checking account and get free ATM transactions at every 7-eleven. Why would I switch?
But more importantly, do what’s best for you. If switching to a credit union is the best option, do it. If staying with Bank of America is your best option, do it. And if moving to an online bank is the best way to meet your financial needs, go that route. But for goodness sake don’t make a switch because it happens to be “Bank Transfer Day.” And don’t believe that a credit union is your best option without carefully weighing the pros and cons.
In a previous post, I quoted a portion of an email I received from a reader about his credit union. Here’s the entire text of his email:
This is my response on the banking newsletter recently published. You requested feedback; here is my experiece with our local Credit Union. Recently they underwent a system upgrade and were closed for 4 days. We were unable to reach anyone or do online banking during this time. Now mind you, we were given fair warning, but money needs always arise at the worst time. When finally able to bank online again, I tried to access the transfer funds tab that had always been available since we set it up after joining to send money into my daughters account. Well, both of her account numbers had disappeared, and to make matters worse, I am out of the country and unable to call them directly due to phone unavailability and time difference. I sent a plea via email as this was a most urgent matter. What do they do, they change my password, making it impossible to even access my account. Oh, this whole ordeal began on Sunday and by today, Thursday, it still is not resolved. Sadly, this has not been the first issue with them either.
Since they are small, there are only a few offices. They are not easy to travel to, I could not get there and back on my lunch hour, so I have to go on Saturday morning. Once the day ends there is no way to contact anyone at the bank. Too bad if you have a problem – you will just have to wait until the next day to resolve it. For what it is worth, my experience with our local Credit Union has been terrible. As soon as I get back home I feel I can find a bank that gives me less headaches. The negative outweighs the positive by far with this institution.
My point isn’t to bash credit unions. Instead, I’m trying to bash the notion that credit unions are always better than big banks. They’re not. You have to do your homework and make the best choice for you.
And if you decide to make a change, check out how to Change Banks in 5 Easy Steps.
Photo Credit: alyceobvious