Break the bank
How to break free of the big banks and put more money in your pocket
The face of Guy Fawkes—the notorious Catholic rebel who attempted to take down the Protestant British monarchy in 1605—has become the symbol for 21st century wannabe revolutionaries. But aside from romanticizing explosives and complete government overthrow, his legacy will also represent a more practical form of resistance that seems simple but holds potential for a complete economic shift—closing your accounts in giant financial institutions.
On Nov. 5, a day celebrated as Guy Fawkes Day, people around the country will make the switch on National Bank Transfer Day. As the Occupy Wall Street movement seeps into every state in the country, credit unions have evolved from a fringe fiscal option to a sensible step for Americans seeking financial liberty.
While Occupy Wall Street and, by extension, the Occupy Everywhere groups support Bank Transfer Day, it’s an idea that’s been working its way into the popular mindset for quite some time.
In years past, banks accepted money from businesses and individuals into savings, checking and other types of money-storage accounts. The banks would then lend that money to fuel economic development of all kinds. The people who borrowed from the banks would pay interest, which the banks would share with the people whose money they used. It was a win-win-win. Borrowers got money, account holders got money, and bank owners got money. And America prospered.
But that is no longer the case. Large banks like Bank of America, Wells Fargo and U.S. Bank have gotten the blame for much of the economic hardship that has stricken this country. Banks are throwing families onto the streets through foreclosures. Banks often refuse to cooperate with mediators to work with homeowners who are underwater contrary to the efforts our government has made to restore the American Dream. Banks have cut lending—both credit for small businesses that would help restore the economy through hiring and business development, and credit for worthy individuals who would spur the economy with their spending. Some banks have plans to charge individuals who use their deposited money—their own money—for services, like ATM card use, to the tune of up to $60 a year. Banks charge poorer people more money. It’s that whole minimum balance strategy. And the thing is, since the advent of computers and online banking, banks are cheaper to operate than they’ve ever been.
Who hasn’t been unfairly charged an overdraft fee or had a faceless fat cat add a late fee to a credit card—even when the payment’s tardiness was the bank’s error? Who hasn’t tried to call their bank and either gotten sent to phone-tree hell or to some outsourced peon in Bangladesh, only to get cut off before the error is corrected? In fact, it’s pretty hard to think of a positive interaction with one of these monoliths at all.
So, people who live on fixed incomes are pissed off. Isn’t $60 like two week’s worth of oil heat in winter? Less financially stable young people are pissed. Former homeowners are pissed. Current homeowners are pissed because they get to watch their home values drop because of the banks’ short-sales. About the only class of people who aren’t pissed are the shareholders, because many banks are posting record profits—quarter after quarter after quarter.
So, in summation: Those big banks can go to hell.
Occupy Credit Unions
There are options, though, and those local options are called “credit unions.” They’ve changed a lot over the last few decades. They’ve even become—not to strain the word’s meaning—sort of hip.
“There’s nothing wrong with someone shifting to a credit union,” said Tom Cargill, professor of economics at the University of Nevada, Reno who belongs to a credit union owned by educators. “It’s not a free lunch—nothing is a free lunch—but there are benefits like higher interest rates on deposits and lower loan rates.”
While the demands of individual customers may vary, the fundamental ideas of community-based leadership and corporate accountability are fairly universal. Occupy Wall Street and the various movements across the country have been criticized for being “anti-capitalism,” but the push toward credit unions reveals the desire to bring capital back to the local communities.
Credit unions have a long and somewhat arcane history. That’s part of the reason it has taken time for average consumers to decide to keep their banking and money local.
“I always felt that it was associated with a city, or a big corporation or a school or university,” said Bob Tregilus, political analyst for Renewable Energy Feed-In Tariffs for Nevada, who is preparing to transfer banks. “I really just didn’t know much about them.”
Founded under the premise of serving specific groups such as teachers or religious organizations, credit unions have since expanded to be far more inclusive.
The September issue of the Federal Reserve Bank of San Francisco’s Economic Letter states, “Credit unions are financial cooperatives with no outstanding stock. Rather, they are ‘owned’ by their members, who are also their borrowers and depositors. This structure presumably leads to different practices and performance goals than those of banks.”
This is what pushed Tregilus to research alternative banking options after spending several years with Bank of America.
“Why not be with a local co-op?” he said. “I want to see money remain local.”
This thinking has been a driving force for OWS. Tregilus is a regular attendee of Occupy Reno demonstrations. The encampments at Zuccotti Park in New York City, the setup of Occupy Portland, and even the embryonic Occupy Reno group at the Moana Lane Pool are examples of how co-ops can function on a larger level.
And while an endorsement of the “Occupy” movement isn’t explicit, it’s pretty clear that the credit unions are happy to support the parts of the movement that benefit credit unions: The front page of the California Credit Union’s website features a banner that reads “Nov. 5 is National Bank Transfer Day.”
The credit union might as well have a picture of a Guy Fawkes mask on their ad.
The Loan Arrangers
It’s pretty hard to imagine Tom Wambaugh or Elisabeth Hadler as the masked man or some kind of revolutionaries. They’re way too nice to want to blow anything up.
Wambaugh is vice-president of member services at Greater Nevada Credit Union. He says, over the years, credit unions have expanded their fields of memberships. Back in the day, memberships to credit unions were often decided by a person’s employment, for example, teachers—like Professor Cargill—military members or hospital employees.
“Greater Nevada’s field of membership is anyone that lives, worships or works in about a dozen of the Northern Nevada counties,” he said. “As you can see, that’s pretty broad.”
On the surface, banks and credit unions appear almost identical, primarily because they do a lot of the same things: checking accounts, savings accounts, loans, etc.
The difference is in how they operate. Corporate banks are owned by stockholders, who aren’t necessarily even customers; credit unions are owned by members. That means banks must please their owners by dragging as much profit out of customers as possible. Credit unions are not-for-profit, so they spend money on things like customer service, higher interest rates for savings, and lower interest rates on loans.
Credit unions used to be inconvenient, with fewer brick-and-mortar storefronts or ATM machines. Not true anymore. For example, Greater Nevada belongs to the largest ATM network in the country.
“At Greater Nevada Credit Union, we have eight branches, and we have a handful of ATMs that are not at one of our branches,” Wambaugh says. “However, we belong to a cooperative where, coast-to-coast, there are ATMs you can use for free. And there are branches you can walk into and make your withdrawals at. You’re not going to find our name when you’re in Florida on vacation or New York when you go there on a business trip, but there are credit unions in those places that cooperate with us. So you can go and conduct transactions, just like you could back home. There’s a huge network of ATMs that members can use at absolutely no charge, more than any of the big banks.”
“There are other things that happen just because you’re in a local institution,” he said. “We know our members, we live with our members, we work with our members. We shop at the same grocery stores as our members. We tend to make decisions that are more member-oriented and member-friendly.”
With reference to the debit card fees that have inspired so many Americans to break away from their monolithic banks, Wambaugh says, “To my knowledge, I haven’t heard of a single credit union issuing fees in Nevada for debit card use. As a matter of fact, we’re about to roll out new accounts in the next couple months that will pay people to use their debit cards.”
To be fair to the banks, some have bowed to public pressure and claimed they will not charge or will retool the structure of the additional debit card fees.
Wambaugh says it’s not difficult to join a credit union these days: “Show up. Become a member and start a share account.” A share account is generally a $25 minimum balance savings account.
You want to know a real difference between banks and credit unions? Wambaugh couldn’t even say something negative about his main competition, Great Basin Credit Union: “Check both institutions out, and go to the one that feels right for you. … Credit unions don’t compete with each other. It’s part of their cooperative nature. It’s people helping people.”
Blech. If it weren’t so refreshing, it’d rot your teeth.
But that attitude runs through the industry. Just try to get Elisabeth Hadler, marketing manager for Great Basin Credit Union, to say something mean about Greater Nevada. She points out that the niceness starts at the top and works its way down. Credit unions don’t even have massively overpaid boards of directors and officers. They’re governed by a volunteer board of directors that’s made up of members.
She says a main reason to join a local credit union is “personalized service. We’re small, we’re accessible, we can keep tabs. You might call a corporate bank and never be able to get hold of a person. If you call us, you’re getting our two-person telephone services department. … We also have all the same conveniences and amenities that banks have. We have great branches, we have free online banking, free online bill pay. It’s all the same awesome services, but without all the hassles, extra hoops, extra fees and so forth.”
“Ultimately,” Hadler says, “we’re all about the people. We don’t have fat cats or suit and ties. Our members own us; we have to do what’s right for them. Otherwise, I don’t have a job. And that’s the whole cooperative idea. And you don’t have to wait until November fifth or whatever other revolutionary day. We can help you with all this stuff any day.”
Frankly, while this all sounds great, there can be difficulties making the switch, and many people who’ve used online banking for years will have to change direct deposits, change automatic payment accounts with individual businesses and utilities, redo billpay. It’s a process that can take weeks. There are things like loans and mortgages that must be dealt with. In the end, it may not even be possible to make a complete break. Bank of America did not return calls seeking comment.
There are many credit unions in Northern Nevada, check out www.findacreditunion.com.
Bank on it
There are other alternatives to banks as well, although they are neither local nor necessarily unrelated to the financial behemoths you’d like to kick in the nuts. Brokerage firms and internet banks have both developed followings in these days of unfettered and unresponsive banks.
Charles Schwab Bank, for example, offers FDIC insurance up to $250,000, free checks, free online-bill pay, free bank transfers, $0 balance minimum, free mail-in deposit with provided self-addressed, stamped envelopes. There’s also unlimited rebates from any ATM worldwide, as long as the Schwab Bank Visa Platinum check card is used.
Fidelity’s Cash Management Account is similar: no fees, no minimum balances, no ATM charges, free billpay, free unlimited checkwriting, free automated money transfers, and all those other services “banks” used to offer at no charge.
But while Schwab and Fidelity are not banks, there are endnotes and stipulations for almost every offer.
Finally, and again, not local, but if you’re just looking out for No. 1, online banks can offer the best interest rates on savings and checking accounts. There is an online bank that’ll fit almost any financial fetish. Two favorites, according to internet scuttlebutt are Ally Bank, www.ally.com, which used to be GMAC Financial Services, and ING Direct, home.ingdirect.com, which used to be a gerund.
People who walk into their bank branch wearing a pencil-thin mustache, soul chip, rouge and a floppy hat this week are likely to be escorted out or get a ride in a police cruiser with interest. But it’s not unlikely that those same revolutionaries would be welcomed into a credit union or other bank alternative with open arms.