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