By now, I expect, you know there’s a movement afoot to get folks to transfer their cash out of the big banking institutions whose unregulated greed helped to bring on the Great Recession (if recession, not depression, is what it is). Armed with a powerfully emotional video, the Move Your Money advocates urge megabank customers to take their business elsewhere—to small community banks or to credit unions.
I moved my money to a credit union quite some time ago, and I’ve never regretted it. Service is infinitely better. Tellers, who are not locked in cages but seated behind open, bright counters, recognize me by name when I visit, and a telephone call reaches a live human being. With a credit union, there are no nicks, gouges, or zings entailed in going about your normal banking activities. Loans are cheaper: just now car loans with 100 percent financing can be had for 4.99 percent, and M’hijito and I nailed a 4.3 percent mortgage over a year ago. Because the credit union never involved itself in questionable lending practices, it remains eminently solvent.
Problem is, moving your money is a bit more complicated than waving a wand, hollering presto-changeo, and rapturing all your cash from Institution A to Institution B, especially if you’ve set up automatic payments for recurring bills. So, assuming you see Wells Fargo, Bank of America, J.P. Morgan Chase, and Citigroup as tentacles of the Great Satan, how do you get free without incurring a raft of unexpected bank charges, without bouncing a check, and without accidentally shorting one or more of your creditors?
In my experience, the easiest and safest way to get your money out of a given bank is through a two-pronged process: set up new accounts in the target institution and then ease your way out of the soon-to-be-former institution. This may take as long as a month.
Start at the time you ordinarily reconcile your bank accounts, so that you can easily identify transactions that have not yet cleared the first bank (let’s call it the First Avaricious Global Bank). Then follow these steps:
1. Cancel all automatic transactions. Check to be sure the cancellations actually go through. Pay any bills that are immediately pending with checks on your First Avaricious account.
2. Go to the new credit union or community bank (we’ll call it Benign Credit Union) and open a new account.
3. Arrange to stop any automatic deposits at First Avaricious and to have those deposits made at Benign Credit Union.
♦ It may take as long as a month for these changes to take place! Your employer may decide to issue a paper paycheck in the interim. This inconvenience will require you to stay alert to all transactions that occur at First Avaricious during the transition. Check your account online at least every other day.
4. Reconcile your accounts at First Avaricious and calculate the amount needed to cover uncleared transactions and the amount of money that will remain after all outstanding EFTs and checks have cleared. Write these numbers down. Let’s say this month you have $1,000 in outstanding transactions, and after those transactions have cleared, you’ll have $500 left.
5. Leave enough cash at First Avaricious to cover the outstanding transactions ($1,000) plus an additional amount to cover any little surprises—about $100 will probably suffice. So, you’re going to leave $1,100 at First Avaricious ($1,000 to cover uncleared transactions + $100) and move $400 to Benign.
♦ First Avaricious will find every way from Sunday to ding you as you draw down your account. Many banks charge customers for dropping below a certain balance. Leave enough cash in the account to cover these gouges; otherwise you will incur more gouges in the form of overdraft charges.
6. With your paycheck and any other regular deposits now going to Benign Credit Union, begin paying your bills from your Benign account. Do not close your First Avaricious account until all outstanding transactions have cleared.
7. As soon as the last outstanding transaction clears First Avaricious, close your account there. Again, check to be sure the closure actually happens.
8. Deposit whatever remains of the $100 you left at First Avaricious in your Benign account.
9. Now set up all your automatic deposits, payments, and funds transfers at Benign.
Voilà! You’re back in business. And business will move a lot more smoothly.
Image: First National Bank of the Republic, Salt Lake City, 1908. Public Domain
Credit unions have their problems too. At my last credit union, to do many translations, I had to show up there to the bank in person. Who does that anyone? I’m much happier interacting with machines and websites than people. My fiance also switched from his small, local bank when he gave them a check, in person, and they inexplicably credited it to his father, who has the same last name and first initial (but not name) and goes to the bank a lot more. Then they couldn’t fix it for a while because they couldn’t find the specific guy who handles all that because he was away. (They didn’t seem terribly concerned that at that moment, because the check didn’t go through, he was basically broke.) At a big bank, there are more people who can handle mishaps, and the specific mistake that was made would not have happened.
@ synapse: Wow! Those stories may beat out the lost municipal bond. They certainly are right up there with the mistaken deposit of 10 grand to my account.
Seriously: I wondered what would’ve happened if I hadn’t called and reported it…surely they would eventually have managed to trace the guy’s money?? But what if I’d flown to Rio by the time they figured it out? 😉
My CU must be fairly large by comparison with the ones readers are describing. It has several branches, and each branch that I’ve visited always has several tellers on duty, plus a manager.
Hm…if they credited the money to Fiance’s dad, how come Dad didn’t just write his son a check or transfer the amount back to him? If they got any flack from the credit union, it would be reasonable to protest that without a person-to-person maneuver Son would have gone hungry.
Me and my wife have had it with BOA. Back in California we eventually moved our money to Wescom CU. Yes, it took a while to setup online billpays and my car loan (which by the way cut my interest) but after that, it was a breeze. Another plus… they’re open 7 days a week, in case you needed to speak to a live person.
Now we’re in Maryland, we moved our money to another CU, car loan and all. They’re not open 7 days a week but it’s fine.
The thing with big banks is that if you don’t have bazillions of dollars with them, you are just a regular jane or joe that they can pretty much have their way with.
So yeah, I agree with Moving Your Money. It’s also a way of helping small business and banks to compete.