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November 5th is Bank Transfer Day, also known as Move Your Money Day, and more than 70,000 people have responded yes! to the national invite.

1. Why Move Your Money?

Chances are you already have concerns about the big banks and their reckless business practices.  No matter where you stand politically, and no matter how tapped into the intricacies of the system you are, we can all probably agree that the big banks engaged in risky business to make a buck, at the expense of ordinary citizens who lost livelihoods and homes in the fallout.  We can also agree that many average citizens are still losing jobs and homes because of the missteps of the bankers, while the bankers are still becoming richer.

I plan to move my money, from Wells Fargo (formerly Wachovia) to a local bank or credit union, because I don’t want to support a system, or contribute to an institution, that operates without moral oversight, without regulation, and who contributes so carelessly to the unhappiness of so many.

I also plan to move my money, because as a supporter of Occupy Wall Street, it’s one significant way I can show my support for the movement without sleeping in a park.

2. Where Should I Move My Money?

Aside from under your mattress, you have two basic options: federal credit unions or local banks.

3. What is a Federal Credit Union & Why is it Better Than a Big Bank?

Federal Credit Unions are not-for-profit institutions.  They’re owned and controlled by their members, but that’s sort of a complicated concept, and in the end, might not be what matters to you.  

In Short

Credit Unions are interested in helping, investing in and serving local communities.  They are not in it to make a profit.  There are no shareholders who expect to make money, and so Credit Unions are free to put time into things like customer service.  Credit Unions are just about the most ethical, socially responsible place to keep your money.

Day to Day Benefits of Moving to a Credit Union

  • Most of the conveniences you enjoy with your big bank, like debit and credit cards, online banking and bill pay, ATM use and savings accounts, are available at most credit unions.
  • You’re likely to get better, more personal service at a Credit Union.
  • Interest rates are generally higher, and fees are typically lower at Credit Unions, because these aspects are determined by an elected Board of Directors, who are usually members as well (and want to enjoy those rates, too).

Challenges of Moving to a Credit Union

Finding a local credit union can be a challenge, at least in my neighborhood in west Brooklyn.  Lots of credit unions are open to only a small group: nurses at a certain hospital or members of a church congregation, for example.

MoveYourMoneyProject.org has a great tool you can use to Find a Local Credit Union, but even after poring through the list, you might not be able to find one that’s right for you.  If that’s the case, you have two options.

Other Options:

        • You can search for a credit union further from your home.  Some credit unions, even if their branches are far away, will allow you to bank locally.  Many CU’s have relationships with other institutions.  So it’s possible to make deposits and withdrawals at your local credit union (of which you are not a member), and use local ATMS (for no fees), while still officially “banking” with the too-far-away credit union.
        • If that won’t work, consider a local bank.

4. What’s the Difference Between a “Regular” Bank and a Local or Community Bank?

In Short

Community (or local) banks tend to focus their efforts and investments on the very localized community around their branches.  They’re independent, which means they’re not a part of one of the major interests that are “too big to fail“.  Local banks tend to operate with less than $1 billion dollars in their coffers, which means they don’t have a disproportional impact on a local, national or global economies.  It also means they’re less likely to take irresponsible risks.

Benefits of Banking Locally

When you bank anywhere, the money you put into your account doesn’t sit around in a shoebox marked with your name till you need some of it.  It goes into the system, where your money can be used for various things like providing people and institutions with loans.  In a local community bank, your money will stay in your community: toward the purchase of homes and small businesses, for example.  In a big bank, your money is spread around the country, invested in foreign currencies, and can even go toward the purchase of corporate stock[1].  Yuk.

Day to Day Benefits of Banking Locally

  • Most of the conveniences of big banks, like credit and debit cards, online banking and bill pay, ATMs and so on, are also available from your local bank.
  • Like credit unions, because the institution is smaller and more community oriented, your customer service is bound to be more personalized and generally superior to a big bank.
  • You’ll enjoy lower fees all around, and probably higher interest rates as well.

5. How Do I Move My Money?

Not sure if you’re doing your banking with no-goodnicks?  This is a list of America’s 50 largest banks.

1. If you find your bank’s name on the list, start researching credit unions and local banks to get off the big-bank sauce asap.

2. Once you’ve decided on a new banking institution or credit union, open an account.

You can visit a local branch to do this, though many will allow you to open an account online or over the phone.  According to Move Your Money Project, “In most cases, you should be able to open a checking account with an initial deposit of $35 to $100. At a credit union, you’ll also become a member and co-owner at the same time.”

Questions to ask your new bank or credit union:

        • are they FDIC or NCUA insured?
        • ask about all fees (ATM, checking, savings)
        • ask about balance limits / minimums
        • ask about direct deposit
        • online / mobile banking: is it available? how to login?
        • online / mobile bill pay: is it easy to set up?
        • credit / debit cards / checks: how long will it take to get these?
        • any other services you presently enjoy with your big bank

3. Reroute all existing direct deposits to your new account.  Also remember to cancel existing online bill pay set ups.  Make notes of all your automatic bill pay options so you can reconfigure them in your new account.

4. Research the appropriate way to close your existing big-bank account.  Taking all your money out doesn’t automatically close the account.  You may need to call the bank, or show up in person to close the account and receive your money.  Be careful of fees if you withdraw your money before you close your account.  Some banks charge for low balances.

When you close your account, have some fun with it.  Thank the teller for his or her customer service, and explain that you cannot, in good conscience, continue to do business with an organization that behaves so recklessly in the global economy, and which acts with no integrity or moral imperative.  Be clear, concise and courteous with the teller when you close your account.

Next, enjoy your new socially responsible banking situation!  Congratulations.

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Resources

  • Enjoy this video from the Move Your Money Project, which uses the movie It’s a Wonderful Life to (somewhat dramatically but very sweetly) illustrate the real life story of community versus national banks.

And have a look at this Democracy Now clip where Amy Goodman speaks with Eugene Jarecki, who made the above film.  In the clip, they show a video of a woman who went to a JP Morgan / Chase bank to close her account with 30 or so other bank customers.  She was dragged into the bank and arrested.

For NY Locals, check out Robert Allen of Teachers Federal Credit Union discussing the differences between credit unions and banks.

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Further Reading

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