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Credit Unions Gain Major Numbers On Bank Transfer Day And Dump Your Bank Day

Sammi Wong |
November 10, 2011 | 3:22 a.m. PST

Staff Writer

With many “too big to fail” banks announcing new fees and charges, many Americans are leaving the banks and searching for smaller non-profit credit unions for their financial needs.

Bank of America sign (Creative Commons)
Bank of America sign (Creative Commons)

Bank of America sparked the movement when they announced a debit card fee of five dollars a month in September. However, despite cancellation of the policy, many bank users are still planning on making the switch because they fear that the charge will still be made in a different and sneakier way.

According to Credit Union National Association, at least 650,000 people have switched over from banks to credit unions since the initial announcement of the fee. Credit unions drew in 40,000 new members on Nov. 5, Bank Transfer Day, alone. The dent that these consumers are making will be considerable especially in combination with Dump Your Bank Day, which took place Tues., Nov. 8.

Since credit unions are non-profit organizations owned by its members, they are devoid of the responsibility of paying federal or state taxes. Many are drawn to the idea because any money made by the organization is circulated back. 

However, because credit unions were founded on the idea of a cooperative financial institution within a community, all of its members must have a commonality between them. Commonalities include working for the same companies, attending the same college, church, or serving in the armed forces.

Whether or not changing to credit unions is a beneficial idea depends on which credit union one decides to join. Many do not realize that credit unions often do charge a monthly fee or has a daily minimum balance. Senior financial analyst with Bankrate.com Greg McBride told ABC News that consumers should research the best option for their financial needs and that might include staying at their current bank.

If more and more people began to switch to credit unions, the ramifications of these switches can be harsh for large for-profit banks. According to their third-quarter report, consumer accounts such as checking accounts, auto loans, or credit cards make up of half of the earnings at Chase.

However, as it stands, banks actually benefitted from Bank Transfer Day, according to an article in the Christian Science Monitor. Since most consumers who worry about increased fees are the least profitable of all the accounts at the banks, their leaving alleviated the banks more than harmed them.

Consumers have to realize though, that there is a delicate balance between making a point and creating more chaos.

This movement has demonstrated that this is a consumer market and that banks that flex their muscles too much will lose its customers.

Laurie Brown, author of the book “The Greet your Customer Manual,” said, as quoted in the Christian Science Monitor. “The point is not to destroy banks, but to make them listen.”

Reach Sammi Wong here.

 



 

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