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Credit Union Business Grows as Consumers Sour on Banks
The big banks may have dropped the debit card fees, but the credit unions are the ones picking up the business.
Long touted by consumer groups as a more consumer-friendly option than large commercial banks, the nation's not-for-profit credit unions saw a significant jump in new members and deposits last month as momentum in the Occupation Wall Street campaign has increased, and many of the big banks rescinded, debit card fees.
The credit unions pulled in some 650,000 new customers since September 29, when Bank of America announced it would add a $5-a-month debit card fee, an industry trade group reported. Deposits from new customers surged to $4.5 billion, according to the survey released Thursday of 5,000 credit unions by the Credit Union National Association.
The deposits from these new customers were about as much as credit unions' get from their entire base of existing customers in a typical month.
No one knows whether the trend away from big banks will slow after the social media-inspired "Bank Transfer Day" on November 5, an orchestrated effort by consumer groups to push the credit union alternative. (photo: timothy.actwell)
Credit unions are chartered as not-for-profit cooperatives owned by their members. Like other financial institutions, they are regulated and deposits of up to $250,000 are federally insured. There are almost 7,800 credit unions in the United States.
A Bank of America spokesperson said the bank's deposit data is not current and won't be available until January. So there are no figures to show whether it lost accounts.
THE LOYALTY PROBLEM
A Harris Interactive poll released Thursday showed that big banks are having problems with customer loyalty. The study found that 17 percent of those who use large banks are not likely to stay with their provider. Almost 90 percent of credit union clients plan to stay put compared to almost 60 percent of big bank clients.
No one knows whether the trend away from big banks will slow after the social media-inspired "Bank Transfer Day" on November 5, an orchestrated effort by consumer groups to push the credit union alternative. But at least some frustrated consumers say they are moving, even after the recent concession on debit charges. They still are looking hard at new charges.
"The $5 fee was the last straw," says Cheryl Pomeroy, 56, an Oak Park, Illinois small business owner who closed her Bank of America account and plans to open a credit union one instead. "If a lot of people do this, it will change."
Membership grew at four out of five credit unions last month, according to CUNA, and in many cases the number of new accounts opened was more than 50 percent higher than the typical monthly amount.
"For years banks counted on consumers being complacent because the hassle of switching was way too high," says Ed Mierzwinksi, U.S. PIRG consumer program director. "This one caused consumers to break their tether to their banks."
As the banks have drawn negative attention in recent weeks, credit unions have been targeting frustrated consumers, running advertising campaigns and promotions to attract new accounts. Many of the ads emphasize that their accounts don't have fees. And frustrated consumers seem to be getting the credit union message.
One of the institutions, the Suncoast Schools Federal Credit Union, headquartered in Tampa, Florida, said the number of new checking accounts increased in October by 92 percent to 5,535 compared to 2,876 in October 2010.
"We're hearing that consumers are fed up with being nickeled and dimed on their checking accounts, and they're ready to move," says Patti Barrow, vice president of marketing for the credit union, which has 500,000 members.
BANKS LOOKING FOR FEES
The banks said the change was necessary because of the Durbin amendment, a provision of the Dodd-Frank financial reform legislation that limited debit card swipe fees that have historically provided significant revenue for the banks.
In recent months, many big banks had announced that they were dropping free checking and adding debit card fees and requiring minimum balances for certain benefits. The public debate escalated at the end of September when Bank of America announced that it would charge customers $5 a month if they made any purchases with debit cards.
The banks' plans to recoup lost income with new consumer fees ran into a wave of criticism, including some from President Obama and numerous consumers groups. The Occupy Wall Street campaign has harnessed some of that frustration and a social media-inspired "Bank Transfer Day" scheduled for November 5 has fueled the debate.
John Hall, a spokesman for the American Bankers Association, encouraged consumers to talk with their financial institution before making a change. "There might be a better product at your own bank," he says.
For strapped consumers the new fees on bank products are hard to swallow. Shari Reimann, 41, of Coral Springs, Florida was thinking about closing one of her two checking accountants because her bank had raised the monthly fee from $8.95 per account to $12. When debit card fees were added: "I went ballistic," she says. That's when a colleague recommended a credit union.
The not-for-profits have played a relatively small role in the nation's financial life in recent years. Indeed, Bill Cheney, president of CUNA, says one of the biggest challenges is informing people about how they work. He says that many people don't realize that they could join some credit unions; they don't have to work for the company where it may be located. That's one reason it launched a consumer Web site in March called aSmarterChoice.org.
The site has seen hits climb to 4,000 a day from 1,000 a day since Bank of America's fee announcement on September 29. Another obstacle, he says, is that people assume that they'll have limited ATM access if they use a credit union. The CO-OP Network has 28,000 surcharge-free ATMs.
(Editing by Linda Stern and Richard Satran)
23 Comments so far
Show AllAs the crooked bankers wallow in their ill-gotten gains, stolen from the Amerikan taxpayers, they are deaf to the sounds of the havoc they have wreaked on the lives of workers.
There is a rumble that is spreading from sea to shining sea, the likes of which these pampered turds have never imagined.
We will take back the nation from the thieving politicians and the criminal class that are feasting on our nation's treasury.
Tom, the unifying effort to punish the big banks and to strengthen our local credit unions has paid off. To move forward we do not need a list of demands but we need to put forward a list of INTENTIONS. I have a proposal:
PROPOSAL: TO ESTABLISH AN ONGOING LIST OF “INTENTIONS” AS OPPOSED TO DEMANDS
_________________________________________________________________
OWS INTENTIONS
_________________________________________________________________
OWS has INTENTIONS, not demands!
It is the INTENTION of OWS to establish a new system of sustainable living for the 21st Century.
It is the INTENTION of OWS to mostly ignore the existing corrupt political system and allow it to
collapse under the weight of it’s own corruption.
It is the INTENTION of OWS to remain a SOCIAL and not a political movement.
It is the INTENTION of OWS to utilize decentralized processes to engender effective change.
It is the INTENTION of OWS to consider each participant a LEADER.
It is the INTENTION of OWS to focus primarily on LOCAL communities.
It is the INTENTION of OWS to emphasize cooperation and reciprocity as prime values.
It is the INTENTION of OWS to stop foreclosures.
It is the INTENTION of OWS to “share” with people who have lost their jobs.
It is the INTENTION of OWS to operate transparently.
It is the INTENTION of OWS to welcome individual participation but not group participation.
_____________________________________________________________
PLEASE CONTINUE TO CREATE ADDITIONAL INTENTIONS, OR MODIFY THIS LIST.
_______________________________________________________________
“You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete.”
Richard Buckminster Fuller
Outstanding! The notion of intentions vs. demands puts power into workers' hands instead of demands that requires actions on the part of the greedy-rich. By stating intentions we ignore the greedy-rich and control our own destinies.
I could never understand why anyone would go to a bank instead of their credit union. You pay lower rates when you borrow, and get higher interest when you save, because you own it, and the people there work for you.
It's a no-brainer, but when I tell people that they say: "but they gave me a key ring or a toaster when I joined"
Perhaps it's a function of Americans phobia, well indoctrinated, against Socialism
Sometimes it is all about convenience and lack of conscious thought. People are waking up...finally...
So, now with the extra money, are credit unions going to start offering loans to business persons who will create jobs within the community or will they just hand it over to the fat cats of every stripe? My impression of my CU is that it is only nominally run by its members. Decisions are made by boards who are frequently not well informed about investments and are not responsive to concerns of members.
Case in point: we needed a machine that accepts coins, making it possible to convert all that loose change into currency. Action taken by the CU: none. My response: start up another account in a bank that has such a machine. Don't imagine that putting your money into a CU automatically means that your money is used wisely. It doesn't.
Are you serious?
I've been a member of 2 credit unions for a few years now. When I want to put coins into my savings account, I get the wrappers from the credit union and roll up the coins.
Who needs a machine?????
That is a weak argument. Go to the grocery store and put your coins through a machine. Loans are not the problem, both large and small businesses have access to credit. A lack of demand is the problem.
I took my money out of Bank of America months ago after years of their shit. I don't know why I waited so long...I guess convenience. I had no bank for a while, and then settled on a community bank in the small town in which I work. I live nearby. There are no credit unions in this area, but the bank in which I store my savings has only that one branch. I am satisfied thus far, and not once regret leaving BoA. There is a class action suit going on against them for the practice they employed on bank overdrafts. They would pay the largest bills first regardless when they were accumulated, thereby "bouncing" several overdraft debits when if done from the smallest to the largest amount would have in most cases caused many fewer overdrafts and, of course, less overdraft fees of $35.00. That bank is the epitome of what is wrong with capitalism and this country. The laws and policies are designed to inflict the greatest damage financially on those least able to afford it.
I cannot speak for most Occupy demonstrators, but for me, it is not change in the commercial banks I want, it is their total and utter destruction. I would never, ever, bank with anyone but a non profit credit union. Once a person has been with a CU for a few years, their loyalty to the CU is total, for good reason. What I want to see is the BoA, Citigroup, etc, closing their doors everywhere. If it happens, I will be sitting in a lawn chair, drinking tea, laughing at their closures.
Total right on; the fascist banks: named above, and more WILL fall with the collapsing empire !
"Total and uter destruction" seems a bit extreme. There is a role for larger banks, but they have to be regulated and can't be allowed to gamble in speculation, hence bringing back Glass-Steagall.
"Another obstacle, he says, is that people assume that they'll have limited ATM access if they use a credit union. The CO-OP Network has 28,000 surcharge-free ATMs."
If it's just limited ATMs that's the issue, keep a minimal amount in a "savings" account where you can withdraw from it at the bank's ATM. With no fees, of course.
I've been with a credit union since 1980. I've never been charged for anything. After moving out of state, I left my banking behind, but when I'd use a bank ATM to access my credit union account, I was charged seventy-five cents. Then the CO-OP Network came in and now I can even make deposits to my out of state credit union at credit unions here. But I also have an emergency account in a local homegrown bank that also has no fees, a higher interest rate than even my credit union, and very friendly people working there. Another plus, for me at least, is that I can get free Notary service at this little bank because I have the account, and can also cash any checks I get without any fuss.
I have been thinking about moving my accounts out of a big bank for months and have failed to act. Seems like a good time, to enhance the reverberation of the simple idea that people hold the true power. For me it is not about fees or convenience, it is the fact that "Too Big to Fail" is a huge risk in our society that I cannot continue to support. Deregulation in this country, the government willfully choosing to look the other way as long as everyone of importance was making money has helped to unleash unbridled capitalism that has brought down the global economy. It is not just about economics, it is about morality. Does our culture continue to push the idea that you need to make money to be "somebody", that you need to make money at the expense of others to be worth something. Our sense of community and trust has disintegrated into instant gratification.
I apologize for the rant...I am just a bit motivated...
Bank of America robbed me of $450 in 6 months. When I was living paycheck to paycheck... they would use some sort of fancy algorithm to delay counting charges on my debit card for several days, then finally pass all the charges simultaneously when my account was low just to send me into the red to maximize overdraft fees. Never mind that debit card transactions are supposed to be immediate... not delayed.
One day I used my debit card nine times for small transactions. They processed days old transactions to make my account suddenly go negative (rather than notify me on time that I was in the red). 9 transactions X $35 overdraft fee per transaction = $315 for one day of overdraft fees. Mind you state law says they can only charge 4 overdraft fees per day... They tried to charge me nine. That is until I marched into their offices and threatened to call the cops on them in front of all their customers standing in line. A "manager" took me into a private office behind closed doors and promised to reimburse me for the extra 5 illegal overdraft fees.
Never again!! Credit Union ever since!! And happy as can be.
I opened a CU account early last month, but had to wait until my social security direct deposit was clear before I could officially drop B of A this week. I felt sorry for the pleading bank employee who interviewed me to close the account, and for the stressed-out manager who came in to shake my hand and express hope that I'd change my mind and come back to them someday. (Not in this lifetime, ladies, though I do hope that you can find honest work in the future.)
Does anyone remember a few years back when the big banks, through their paid-for proxies in the federal government, tried to pass legislation that would have put credit unions out of business? I don't remember the details, but I'm sure we can expect it again.
I've been with a credit union for 40 years and could never understand why any working-class person would use a bank instead. Of course, I came into this world shortly after the Great Depression, and I can still remember countless stories farmers told about how the banks and their cronies used the economic downturns they had created to steal homes and farmlands. (Does any of this sound familiar to events in our country today?) Their opinions of Wall Street foreshadowed the stories we hear about the criminal capitalists who control government policies in our own time.
The greedy class never changes. They want it all--and they don't give a damn about what happens to the rest of the human race that they drive into poverty and homelessness.
Some of these same farmers, shorn of virtually everything they once owned, were reduced to living in cheap hotel rooms in a rundown, small town hotel where I worked part-time as a desk clerk. Every day they gathered in the lobby to play cards and tell stories about the Great Depression and the forces that had created the human misery that accompanied it. They had nothing but contempt for the banks and Wall Street.
Those farmers were the best damn financial advisors I ever listened to in my entire life. In fact, they were the only ones.
I wasn't paying any attention to politics until 1992, when my attention was drawn to GHW Bush before the Gulf War, and I realized it was time to do more than just pay attention.
That's beside the point though. I don't know about the banks going after credit unions. I do know my credit union was named "Federal" when I joined it in 1980, and suddenly changed to "Financial" around 1990. I love history, and have been amazed at how things in the past sound just like today. Guess we just never learn.
I agree with Old Guy.
The banks, at this point, they don't care about anyone. They (banks) have transferred most, if not, all customer service for credit cards to Philippines or India (outsourcing). The banks, in part, also changed interest rates, slashed credit limits, on existing credit cards. Not to mention the fees they are charging.
Now, what people must understand, that is how both, credit unions and banks make their money - fees and interest (loans/credit cards). Credit unions, don't pay their committees (supervisory/credit) and board members salaries - these are usually volunteer positions. Even though some credit unions signs say they are usually for employees, some, it just takes that you live in the area, or work in the area.
With the CO-OPT/or Shared Branches, means that you can use this type ATM free of charge, you can also go inside the branch and use services (however, some things you will face a charge, meaning the shared branch can charge you a fee for a credit union check (money order) that you can probably get free at your own branch, for example, if you bank at a credit union name abc, but go to an entirely different credit union name xyz, they can charge you for a credit union check. It is easier to get a loan from the credit union - one thing about this, make sure this credit union reports its loan to credit bureaus - as some do not. Also, if you are late on your loan, the credit unions will usually work with you, but, the banks will sell your loan to credit collection agencies/or they themselves will call and harass you.
Credit unions offer just about any and all services of a bank, such as wire transfers, online banking, e-statements...also, opening a checking account, some of these credit unions can give you temporary checks on the spot that are pre-printed with your name/address on it, also, some can issue you a debit card (with visa logo) on the spot.
so they take their money out of the banks.
the gummint will just tax them more and put it back in.
To Drosera,
In response to your comment that the board members lack info on investments...
Credit unions usually hold elections for these volunteer positions, (usually there is a mailer included with statements, sometimes postings in the credit union). I think this would be a good time for the college students/grads majoring in accounting/business administration to apply for these positions. Accounting classes cover investments, however, they would need to pick up the book 'Robert's Rules of Order,' this would cover info on holding board positions. This is a good way to boost their resumes as well. In addition, a way to meet regulators, and insurance rep (they have to be bonded just like any other teller, credit union or bank) and get an indept look at how credit unions are run. BTW, I hope your board are not paying sales taxes when they purchase supplies - something some members seem to forget.
The credit union also need to have a strong supervisory committee as well. Believe it or not, but, the supervisory committee is more powerful than the board. The board makes decisions, and hold the purse strings. But, the supervisory committee's job is to make sure the board is meeting and maybe sit in on some of the meetings, spot checks to see if the loans are in compliance, that accounts are up to date, spot checks on tellers for key control...there are so much more, but, it is up to the supervisory committee's job to make sure the credit union does not become a CAMEL rating 3, especially 4.
With business loans, yes, they do offer business loans. They have business savings/checking accounts as well.
a) MAKING GOVERNMENT THE LENDER AND BANKING THE BORROWER INSTEAD OF TAXATION
b) IMPLEMENTING FULL EMPLOYMENT POLICY (a right to work) - only these two will do it