Time to Switch Banks?
Big banks have played a big part in the recent economic downturn. Giving out loans to people who have no qualifications, charging astronomical interest rates on credit cards, and receiving large taxpayer-funded bailouts are just a few of the practices that have contributed to the recent recession and have really put at the forefront the amount of greed and recklessness that the heads of these companies possess. In addition, seeing the top executives of these companies make like bandits by raking in billions year after year at the expense of the American citizens has created some anger in the public that has been building up in the recent years. The Occupy Wall Street movement started based on opposition to these very characteristics of greed and hypocrisy among top executives on Wall Street, especially among executives of big banks.
Big banks have played a big part in the recent economic downturn. Giving out loans to people who have no qualifications, charging astronomical interest rates on credit cards, and receiving large taxpayer-funded bailouts are just a few of the practices that have contributed to the recent recession and have really put at the forefront the amount of greed and recklessness that the heads of these companies possess. In addition, seeing the top executives of these companies make like bandits by raking in billions year after year at the expense of the American citizens has created some anger in the public that has been building up in the recent years. The Occupy Wall Street movement started based on opposition to these very characteristics of greed and hypocrisy among top executives on Wall Street, especially among executives of big banks. Despite all of these reasons, many people still have accounts with the big banks because they are everywhere and “convenient”. But that could all change very soon.
Starting in 2012, Bank of America will charge its customers $5 a month just for using a debit card. Even if you use your debit card once a month, you will still be charged the new fee unless you switch to a “platinum” account or any other account which has a higher minimum balance. The days of free checking at the big banks are essentially gone, as most other big banks already have such a fee or will implement it in the near future. Though such a fee seems like simple robbery, the CEO’s and their slick PR firms already have a stock reply ready. They contend that because of the passage of the Dodd-Frank Act – which implemented some regulations against banks including putting a cap on how much they can charge businesses for accepting their debit card transactions – they need to start this new debit card fee to make up for the shortfall. They say this despite nearly every big bank reporting record profits in the last quarter. In some years, Bank of America has made more of its profits from fees than from its investments. Even though a $5 monthly fee comes out to just $60 a year, which is not a huge amount to most people, this fee might be the straw that breaks the camel’s back. On top of overdraft fees and “account maintenance” fees, the upcoming debit card fee seems to be affecting people the most because it seems like they are being charged for nothing. Such bold-faced lies and petty fees are finally starting to rile up some customers. In a recent survey by the Research Intelligence Group, a third of respondents say they plan to leave Bank of America because of the new fee. But many people have had a relationship with their big bank for years and are not sure where they can turn.
One popular choice for people switching from the big banks is to go with a credit union. Credit unions are local non-profit entities that offer many of the same services as the big banks, such as checking and savings accounts, credit cards, mortgages and auto loans. Credit unions usually cater to a certain group, such as employees of a company or alumni of certain colleges. So while you may not be able to join any credit union you want, there are still many options out there. They also serve family members of any eligible member. When you join a credit union, you become a shareholder in the company, accountable to your fellow shareholders and not to some big executive. But the main reason people go to credit unions is that they don’t tend to charge the many petty fees that the big banks do. They definitely do not charge debit card fees. They also tend to have better customer service and a more personal atmosphere. Not all credit unions are the exact same, so it is important to do some research to find the one that suits your needs best. But when you do, you can finally stick it to the big banks and take your money elsewhere.
Another option to consider is online banks. They do not have many physical branches that you can visit, but this helps in keeping costs down so they also tend not to charge outrageous fees like the big banks. When you mention an online bank to someone, they worry about not being able to deposit or withdraw money easily because there is not a physical branch they can go to. Many online banks have answered this concern by allowing ATM withdrawals from anywhere, while refunding the ATM fees to you at the end of the month. They all have their own debit cards so this makes getting money easy. Many banks are now allowing deposit by Smartphone. Just by using their app and taking a picture of your check, a deposit can easily be made. Since many people bank online anyway, an exclusively online bank is a great choice as well. Some great online banks include Charles Schwab, Ally and ING Direct.
While there are many alternatives to the big banks, and many people will indeed take their money elsewhere, many customers unfortunately will not. Many people are very resistant to change and fear leaving their banks which they have been with for years. In physics, the term inertia refers to the law that an object that is at rest will tend to stay at rest. The big banks thrive on this “banking inertia”, which means that for most people, their first bank will likely be their only bank. The banks try to get their claws as deep as they can into people, providing them their checking, credit cards and loans without much hassle. But try to close an account and see the reaction you will get.
It is interesting to realize that we can do anything with our bank accounts online – except close them of course. To close an account, we have to send a hand-written letter or speak to someone in person, who will do their best to beg you to stay. The banks will make it as difficult as possible to close your account, especially with their upcoming fees. But if you do your research and confidently state your case, they will have no reason to deny you. It is time to finally take a stand against the predatory tactics of the big banks. Ultimately, we the people have the choice of where to use our money and who to support. The banks would like to make us think that they are the only business in town, but that is just not true anymore. We have many options and should feel free to support those companies that are doing the right thing.