Photo: Phoebe Stein
Financial big wigs like Bank of America and Chase have eaten their fair share of crow in the last week, as each backpedaled on plans to slap customers with a $5 monthly debit card fee.But for many consumers, it may have been too little, too late.
More than half a million Americans have fled major banks since Sept. 29, draining their accounts to the tune of $4.5 billion and flooding credit unions with new business, according to the Credit Union National Association.
Much of this trend can be attributed to National Bank Transfer Day, which is scheduled for Nov. 5 and has rallied disgruntled consumers to ditch their accounts at major banking institutions in favour of smaller credit unions.
The movement has attracted more than 74,000 fans on its Facebook page and for weeks fans have riddled the site with posts crying foul over what they see as unjustified fees nibbling away at their checking accounts.
Phoebe Stein, of Brooklyn, NY, dumped her checking and savings accounts at Bank of America on Monday, the same day the bank said it was dropping the debit card fee. For Stein, the damage had already been done.
“They rescinded (their plan), but I was just fed up with all the fees,” she said. “I had already been getting $14 charges because I guess my account balance was too low because they upped their minimum balance.”
The 28-year-old looked at half a dozen different banks before putting a call out on a community message board in her neighbourhood for recommendations. Several positive referrals led her to USAA.
The military-based bank has no local branches in her area but offers all its services online in addition to allowing customers to deposit checks at any UPS store. Her checking and savings accounts both earn interest, the bank reimburses customers up to $15 for ATM fees and charges no additional fees, she said.
With perks like this, it’s no wonder consumers are fleeing big banks in droves.
Elle Kaplan, CEO of asset management firm Lexicon Capital Management LLC, said she’s already transferred her checking account to a credit union.
“Why should I pay to access my own money?” she said. “I’ve advised all my clients to do the same.”
If you’re considering transferring accounts, the process can be simple if you handle it carefully and plan ahead. Here are a few guidelines to follow:
Make a list, check it twice. Don’t get too excited once you’ve found you new bank and start throwing all your eggs in its basket. Stein suggests making a list of all the bills and utilities that you have linked to your current account. Then be sure to leave enough in the old account to meet those needs.
Move your money. Transferring cash can be simple if your new bank offers the service online. You can also ask if they have “Switch kit” — a tool that helps new customers transfer cash from other accounts — and start moving funds over that way.
Close your old account. As soon as Stein’s rent check cleared for November, she marched into a Bank of America branch to close her account. A sales representative tried to tempt her to chat before she closed her account, but she held her ground. A cashier finalised her closing and handed her a check for her remaining balance. Done and done.