While some think Bank Transfer Day will be the biggest flop since the Kardashian wedding, it’s been hard for supporters, opponents, and the media alike to ignore the growing numbers: on Facebook, nearly 73,000 have said they will be “attending” Bank Transfer Day.
Bank Transfer Day is a movement to encourage consumers to switch from their for-profit banking institutions to not-for-profit credit unions by November 5th. Started when one young woman was fed up with her big bank, she created the Facebook event that has since garnered thousands of supporters as well as continued media attention.
Before you hop the BTD bandwagon, go through this questionnaire to help you decide for yourself whether or not switching financial institutions is the right move for you.
1) Are the fees worthwhile? While Bank of America dropped the $5 debit card fee shortly after Chase and Wells Fargo also decided against similar charges, there are still other fees to consider. Several large banks have monthly fees and inactivity fees, and a Bankrate.com study found that only 45% of non-interest checking accounts don’t have fees. Take a look at your last month’s bank statement; did you accrue any unexpected overdraft fees, ATM charges, and monthly fees? Does the service, convenience, or products of your current bank outweigh the fees you may end up being charged with?
- Yes. Stay. While many banks have checking account fees, 92% of these banks do offer certain fee waiver requirements, such as having a minimum monthly balance or enrolling in direct deposit. Also, many large banks compensate for these fees with services that not many local credit unions can compete with, such as robust mobile banking, online banking, in-branch customer service, and cash bonus offers.
- No. Switch. While the debit card fee has been eliminated for now, banks may resort to increasing current fees such as ATM fees, late fees, and even credit card interest rate hikes. Many credit unions offer fee-free banking accounts that have no minimum balance requirements or monthly fees. Many also offer free ATM access or monthly reimbursements for ATM fees. In addition to no fees, some credit unions offer competitive rates for checking accounts. For example, Alliant Credit Union offers an above-average 1.10% APY on their free checking account, as compared to the national checking account average interest of 0.08%.
2) Do you do all of your banking at one bank? One of the primary ways banks retain customers is by encouraging them to get a savings account or mortgage, sign up for online banking, add automatic bill pay, or open a new credit card. All of these elements are “sticky”; the more your banking is centralized to one place, the more painful it is for customers to switch.
- Yes. Maybe stay. Many customers stay at their bank because it’s simply more painful to switch banks than to, for example, pay a $5 debit card fee. It’s less convenient and messier to move banking transactions such as direct transfers, bill pay, and reoccurring transfers. If this is the case for you, consider calling up your bank’s customer service and asking for certain account fees to be removed. If you are a customer with multiple financial products from your bank, they will be more likely to compromise with you over a minimal fee if it means keeping your money.
- No. Maybe switch. If it’s easy for you to move your money, why not move it to get better returns? You are likely to find better terms on certain financial products at a credit union versus a big bank. Credit unions often offer better rates than big banks, so you can earn a higher yield on your checking and savings account, and credit unions also typically offer lower rates on loans and credit cards.
3) How important is convenience? One of the largest differentiators between a bank and a credit union is access—from branches, to online banking, to banking from your smartphone.
- a. Very. Stay. Big banks offer a national network of branches while most credit unions have local branches. Also, big banks tend to have more built out, comprehensive mobile and online banking access. Most credit unions now offer online and mobile banking, but for services such as making deposits, you’ll need to mail in or scan a check in order to make remote deposits. If you want to be able to stop in a branch to do your banking, or like the flexibility of banking from your phone and online, your big bank can serve you well.
- b. Not very. Switch. Many credit unions offer branch and ATM access at other participating credit unions, and most credit unions offer basic mobile and online banking. While you may not get widely accessible, in-person branch access from a credit union, what will you will get is personalised customer service at local branches. Credit unions are known for the “Cheers” effect, when you can walk in and the employees will know your name. If you value one-on-one service over nationwide access, credit unions are your best bet.
Convinced whether you should stay at your big bank or switch to a credit union? Beyond these three questions, the most important next step is to research your banking options. Check out and read banking reviews and credit union reviews, and be sure to read the fine print and terms of any banking product you may open.
Justine Rivero is the Credit Advisor for CreditKarma.com, a free credit management website that helps nearly 3.5 million consumers access their truly free credit score.