Banking Opportunities

october 13, 2011

The Problem

It's all over the news now: Big banks are going to start nickel and diming customers with fees to "make up" for lost profits because, in part, of the Durbin Amendment. I'll believe that big banks are hurting for profits the day that their CEOs stop making multi-million dollars. When a friend was asking about Citi fees for checking on Twitter, I replied to him about Citi's new fees and requirements and how I am moving the family finances over to a local credit union -- and just for fun, I threw a @citi and a "big greedy bank" into my tweet.

The Insanity

Almost instantly, I got a "you're being followed by @askciti" and then shortly after that I received this from @askciti:
@ultramookie I'm happy to review the opportunities to avoid the monthly fees. Please DM your phone # and best time to call. (no acct/PIN)


Seriously? Review my "opportunities"? Citi's lost their connection to reality. I am a customer there and I was frustrated by their "you need to have $6000 in your account at all times or we'll charge you $15/mo for checking" attitude. 

After receiving the letter telling me about the fees, I did review my opportunities and the best solution for this fee problem? It was to take my money to a place where the financial institution actually cared about me and not paying for some CEO's salary -- and that would be at a credit union (where I would be a part owner). I wrote @askciti back to let them know that I already reviewed my opportunities and I have already opened an account at a credit union and that I don't appreciate having to jump through corporate hoops.

The Solution

I am posting some of my research notes for credit unions here so that people can have access to the information that I was able to scrounge up. I am hoping that it'll help others move away from these big greedy banks -- stop just complaining and do something. If you're not happy with your bank, take your business elsewhere. Trust me when I say that with the advent of internet banking, the switch from a bank to a credit union is not as difficult as you think. 

findacreditunion.com helps to locate local credit unions and gives an idea about what the membership requirements are (for instance "you have to live in Santa Clara county" or "you have to be in the military", etc). Don't be discouraged, you will likely qualify for most credit unions.

When you find a few, check out their financial health using Bankrate. The NCUA (insurer of deposits for credit unions) also has a health check.

Make sure that the place that you decide on is part of the Credit Union Service Centers and also the CO-OP Network.  The first lets you take your banking to any of the other credit unions in the "Service Center" coop and do your banking there as if it was your own branch office. The second lets you take your ATM card to any of 28,000 plus ATMs that are part of coop credit unions and use them like your own without and fees -- and on top of those 28,000 you will also have access to ATMs in places like 7-Eleven too. 

Your money at credit unions are insured by the NCUA, they are exactly like FDIC, but for credit unions. They'll insure your deposits up to $250,000. 

In the past, credit unions were a bit of a hassle because they were small and people were limited to where they could do their banking. This has been solved with the coops. The coops make credit unions just as accessible as the "big" banks.

You should be aware that most credit unions make you pay a one-time membership fee upfront -- it's paying for your ownership share of the credit union. I had to put $5 into the savings account that can't be taken out as part of the membership -- and also put $10 into the checking account, which can be used. A one-time $15 fee is not bad when compared to Citi's outrageous $15/mo fee -- especially since there's no requirement to maintain a minimum deposit a checking account (or savings outside of the $5) for free checking. What's even better is that some credit unions offer high interest rates for money in checking accounts. 

Inertia

For a lot of us (myself included), sometimes inertia is comforting. Why do research? Why do all this work to move things around? Oh c'mon Mookie, just do what you need in order to have free checking at Citi and be done with it! To hell with that, if Citi makes me jump through hoops for something that a credit union gives for free without hoops, I'll will take my money to a place that cares. The banks should be catering to me in order to keep my money at their banks to fund their profit growth. Not the other way around.

Don't let inertia stop you from doing what's right.