I have never been what you could call a leader. When I was younger, I wanted to be a child prodigy, but that didn’t work out. I haven’t discerned what the middle-aged version of a prodigy is, but it doesn’t matter because I’m not one of those either.
However, I have found one area where I am ahead of the crowd, if only accidentally. This past weekend was Bank Transfer Day, the date by which small business owner Kristen Christian (which, I’m sorry, really sounds like a name Mad magazine made up)
urged consumers to move their money from the big banks to credit unions.
Heck, I’m already there. I did that last year, as I noted when I closed my Bank of America accounts, after 37 years, difficult as it was. To recap, we attempted to refinance our home with Bank of America. Even though we had equity in the house and other investments, B of A balked because I was self-employed and my income had gone down. I tried to explain that there had been a recession. It was in all the papers.
In disgust, I moved my personal accounts and our household accounts to a local credit union. As it turned out, this was a good move. My investment adviser had me in a boatload of Bank of America stock, which I sold at three times its current value.
Will it turn out as well for you if you follow Kristen Christian’s lead? I can’t say, but I can tell you that it’s not easy changing your financial institution. It’s a complicated process that’s similar to mounting a military offensive. It takes planning and execution and even then there’s no guarantee of success. Here’s why:
Unraveling The Relationship. At most boomers’ stage of life, you don’t just walk into a
bank and walk out with cash, as news reports showed people doing this weekend. Between personal and household checking, saving, credit cards, and investment accounts, my wife and I had ten different accounts with Bank of America.
Preparing For the Shift. If you have online bill paying and direct deposit, you have to open the new account before you close the old one. You have to switch the account to
which your paycheck goes – and, oh by the way, make sure that the deposit goes through accurately at least once. Then you have to set up your bill-paying protocols yet again. And if you have automatic deductions, you have make sure that there’s enough money in the proper account before you do so.
Learning New Systems. You have to learn how the credit union’s bill-paying system works. Because of its size, your new credit union may not have the IT resources – even if it’s part of a larger cooperative, as mine is – to have a spiffy online banking system. My new one is, to be kind, a work in progress. Credit unions also have different restrictions on how much credit they can extend to households. If you’re used to credit cards for yourself, your spouse, your household, and your business, be prepared for minimal – and permanent – credit lines on each. When I asked one credit union employee what I was supposed to do if I wanted to make a large purchase, he cheerily replied, “Don’t give up your other credit cards.”
Dealing With New People. Credit unions don’t pay their employees any more than banks do, so you run the risk of dealing with front-line people who are no more efficient
than the ones you left behind. We were given more misinformation in the first three months of dealing with my credit union than in three decades with Bank of America. My wife was so fed up in that short period of time that she ended up never closing her Bank of America personal account; she closed her credit union account instead.
The bottom line: both banks and credit unions have their pros and cons. Most credit unions are less fee-happy than banks. They would never consider slapping a $5 debit card usage fee on its customers. The debit card takes the place of checks, which are a labor-intensive form of payment. Charging customers for saving you money – as Bank of America belatedly figured out – was a bad idea. Nor does not charge overdraft fees until you’ve bounced three checks, which even I, with my poor math skills, can avoid. And they did – after a typically lengthy, drawn-out process – refinance our house at a lower
interest rate, which was our original goal.
On the con side, I sacrifice some convenience. My credit union, even as part of a cooperative, has fewer ATMs than Bank of America. When I have to conduct business that can’t be done through an ATM, such as exchanging rolled coins for paper money, I used to have to schlep the ten miles to their office.
Then I realized I could just ask my wife to take the coins around the corner to the Bank of America. At my age, it’s better to be pragmatic than dogmatic.