Reader Story: How (and Why) I Moved My Money to a Local Bank
Published on - April 18th, 2010 (by J.D. Roth) This guest post from Aja is part of the “reader stories” feature here at Get Rich Slowly. Some reader stories contain general “how I did X” advice, and others are examples of how a GRS reader achieved financial success — or failure.
By now we’ve all heard about how the giant national banks (Bank of America, Chase, Citibank) are “too big to fail” and have to be rescued from their mistakes with our taxpayer money. Like most Americans, I watched the bailouts of 2008 and 2009 unfold in helpless disbelief…these big banks were taking money out of my tax dollars to spend on CEO bonuses and stock market gambles, and it felt like there was nothing I could do about it.
But I decided there was something I could do. I’d been a customer with Chase (previously Washington Mutual). After reading J.D.’s article on rewards checking accounts and realizing I was missing out, I closed my account with Chase and moved my checking and savings to a local credit union down the street. I have to say, it felt great.
My new credit union insures my money just as well as the big bank, but it also offers a ridiculously high interest rate on my checking account, refunds on ATM fees so I can use any ATM I want (even those $3 fees at the back of the convenience stores), really great customer service, and — best of all — free cookies on Fridays.
They can afford to do all of this because, as a credit union, their top priority is me, the member. Not CEO and shareholder profits, not bloated advertising budgets. And best of all, by moving my money to a local community bank, I’ve taken money away from the poorly-managed, impersonal big bank and given it to a bank that will actually use it to help me and people in my community.
I made a real difference, and while my tiny accounts are nothing to a company like Chase, they matter a lot to my local bank and my community. (And did I mention the free cookies?)
Here’s an interesting (if over-earnest) video about the difference between big banks and small banks:
If you, too, have been thinking about moving your money, here’s what you can do:
- Ask your friends, neighbors, and coworkers if any of them are using a local community bank or credit union. What do they think? Do they have any recommendations? You can also try the “Find a Bank” locator at the Move Your Money project.
- Once you’ve decided on a local bank that meets your needs, set aside half an hour to stop by a nearby branch and open an account. I’ve always found this a very pleasant experience.
- Start to contact any companies that have your debit/credit card or bank information on file, and give them the new bank’s info. It’s best to get this all done about a week before the next step, so that everything’s nice and tidy.
- Set aside about an hour to head to your old “too big to fail” bank and close your account. If you haven’t already done so, get the rest of your funds in a check to bring to your new bank. If you’ve already transferred all auto-billing to the new bank, this should be a quick and relatively painless process (easier than trying to cancel your cable service, anyhow).
If you’re like me, you’ll find that you don’t lose a thing by moving your money. In fact, you may gain better service and better interest rates! And free cookies on Fridays…
Reminder: This is a story from one of your fellow readers. Please be nice. After nearly a decade of blogging, I have a thick skin, but it can be scary to put your story out in public for the first time. Remember that this guest author isn’t a professional writer, and is just learning about money like you are.
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Reminder: This is a story from one of your fellow readers. Please be nice. After nearly a decade of blogging, I have a thick skin, but it can be scary to put your story out in public for the first time. Remember that this guest author isn’t a professional writer, and is just learning about money like you are.
I have nothing to say re the article. But seeing these words made me happy and I wanted to applaud you for posting them, J.D. That sort of thing goes a long way toward setting the right tone for discussions.
Rob
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Good article. I recently opened a savings account at my local credit union, and really am happy about it. Credit unions typically have lower interest rates on car loans as well…fyi.
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I used to work at a bank for many years. While it was great there were many things we did that did not feel right. We would not refund fees, no matter what. We tried to help people, if it was within our products. A few years ago I started working at a Credit Union. We truly care about the people. We do refund fees. We try to listen to our members needs, and give them the products they want. The big thing is that we want people to succeed. If our members have money, we are able to loan more. As we loan more, at lower rates, we are able to help still more people achieve their goals.
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I love the idea of credit unions and local banks, but have switched to Chase after long-term annoyances with my former credit union.
I had accounts with my credit union in the town where I used to live. After getting divorced and separating my accounts from my ex’s, I started noticing an $8 “service fee” every month on my statements. This was on a no-fee account. Every month, I’d have to find a time to call them during their service hours. Every month, they’d remove the fee without argument.
And every month, I’d get another service fee. Sometimes I’d be busy and forget to call, resulting in another loss of $8. Seems like small change, I guess, but I was a grad student at the time and eight dollars seemed like a lot of money.
I finally got so annoyed with them that I switched to Chase, which was a good idea, since I’ve ended up moving across the country four times since then. I don’t love Chase, and I’d switch banks again if they stopped providing easily-accessed basic services.
But my credit union experience was quite off-putting.
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My local bank was bought out by a big bank several years ago but I can’t tell the difference. Still the same nice people and good service. My Credit Union is nice, too, but their interest rates on savings and investments are abysmal.
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How timely! I made this switch about 2 months ago. Although I’m a little disappointed at the loss of some high-tech features (the CU online features are a bit old-timey and it’s not part of Mint’s network), I love everything else about it. For personalized service and the absence of fees and minimum balances, my CU is great.
We switched partly because our semi-local bank was bought out by a larger company, and partly because we are planning to buy a new car and take out a home equity loan in the next year or 2, and wanted the benefits of having those loans through a CU rather than a big bank. Wish they offered cookies, though…
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A while ago I made a similar switch, it was time to redesign my financial system. Went online found a local bank with rewards checking 4.01% !!! 15 credit transactions a month +direct deposit. I get my ATM fees refunded. And a safer feeling. Billpay works fine, compatible with mint. The branch is a little farther away, but more professional and courteous. Next step was getting a rewards credit card to cover big purchases like plane tickets, costco trips, and the like. Costco american express. Totally worth it. Getting deposits for all the interest and rewards cash back is really nice. I watch my accounts like a hawk so it makes sense for me. I recommend anyone find a better bank.
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There is a broader reason to use local banks–for every dollar put in a local bank, more of that dollar stays in the local community compared to big banks. A strong local economy “floats all boats” higher. It’s the same reasoning behind “buy local” campaigns. If you want to learn more, I recommend a book called The Small-Mart Revolution by Michael Shuman.
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Someone mentioned that credit unions vs community banks is not a level playing field because credit unions don’t pay taxes. I just wanted to note that my understanding is that credit unions are non-profits.
That’s why they don’t pay taxes. It’s not that they are getting some big break. They return profits to the members. Which is quite a bit different to community banks, which return profits to their owners, and publicly-held national banks, which return profits *in theory* to their stockholders but in reality to their executives. Just look at the meagre dividends these companies pay for verification.
I have my regular checking – free because I have direct deposit – and savings accounts at Union Bank of California. My business accounts are at the University Credit Union. If we ever finance a car again, it will be through UCU. (Which is open Saturday mornings.)
Banking is, like any other financial decision, completely individual. But I’m with those who favor keeping resources in the community.
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I just want to say it made me feel better to switch to a CU after the bank bailout.
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My local bank had free cookies, too! You have to shop around with your local banks – some have a great online presence, while others are still figuring out how to get online. I especially liked the fact that my local credit union didn’t sell off my mortgage to some company but serviced it in house. Credit unions do have unique feel about them because their commitment is their members – you.
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For anyone feeling hindered by the lack of ATM locations for local credit unions, there is the Co-Op Network. Most credit unions belong to the Co-Op Network, which means you can withdraw or deposit through another credit union’s ATM without a penalty. Just look for the Co-Op logo on the ATM.
I’ve been able to travel throughout the United States and access my cash because of this, and I find more Co-Op machines than Chase or Bank of America ATMs (they used to be my banks).
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All very nice, but we got our mortgage through my wife’s CU, and they sold it to Wells Fargo before I could write the first check. I’m learning the ropes on my own employee CU, though, and have already opened a 10.5% APR credit card with them to pay off my 18.9% Citibank card when they jacked the rate up to 28.9% (but wait, you get a 10% “rebate” if you never miss a payment!). So right now, CU’s have been a double edged sword.
I have kept my Ciitbank card account open, though, since, allegedly, your credit score looks better if you have had accounts open for a long time. Izzat so?
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Switched to a local credit union after Citi changed the rules on my checking account requiring a large average monthly balance to avoid a $9/month maintenance fee.
Now I still have free checking, free online bill pay, free monthly paper statements, free access to other credit union ATMs around the country, and NO maintenance fees. Plus they’re open on Saturdays, and I have free access to the coinstar coin counter in the lobby as long as I’m depositing the change into my account.
Never going back. Why pay a monthly fee when you can get the same, or more, service for free.
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The best (and only) financial advice I received from my mom was to open an account with a credit union as opposed to a big bank. That was 12 years ago and I still swear by that advice. I get around the ATM fees by using surcharge free ATMs at Wawa (a regional convenience store) or 7-11. Sometimes the ATMs at Sunoco gas stations are free too.
If you go to INGs website
and click on “Find a FREE ATM near you” on the right side of the screen, you can put in your zipcode and get a listing of free ATMs near you!
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This seems like a great idea… If you are stable enough.
I have not ‘settled’ in one neighborhood and find it hard to settle on a ‘local’ bank due to the challenges of not committing to one area.
Has anyone dealt with a similar situation? You aren’t settled in a living situation. i.e. renting
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Barry made a good point, I was thinking along those lines as well.
Not that it is an uneven playing field per se, but that local bank is what the article title implies and at least for me my local credit union has always been far better than not just the national banks, but the local banks as well.
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My credit union became a federal savings bank, then by a terrible big bank.
So I moved my money to little local savings bank.
The next month it was taken over by big bank.
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I had several horrible experiences with banks while in college. I switched to a credit union account and everything was fine for 10 years. Then they changed names to Smart Financial. They changed their website and things in general went downhill. So I switched to Bank of America as at the time i was starting a job where i would be traveling all over the states.
AGAIN, one horrible thing after another. The breaking point was when I went into a New York bank wanting to withdraw $40. They gave me a hard time b/c my photo was not on the debit card. Hello, i did not issue the card to myself. I also didn’t have a pin number b/c i don’t trust myself to be able to withdraw cash willy nilly out of the ATM. They didn’t like that either. So after more hard times about other ridiculous things, an hour and 2 managers later on my one day off that week, i finally got my measly $40.
Needless to say i switched to another credit union, UFCU.org, when i got back home. They’ve been great. So no, not all credit unions are perfect, but mine is right now. And they have member banking. So i can go into any branch of a sister credit union and get help. I’ve never been anywhere where there wasn’t a branch within 30 minutes.
And for the prior poster who mentioned not having access to funds if there is a catastrophe, well that holds true whether you have a credit union or bank. it’s just smart to have a second bank. Natural disasters aren’t the only type of catastrophe/bad thing to happen to you. We had our debit card cloned and didn’t have access to the card for a few weeks. It didn’t matter though, b/c we had accounts at ING. It’s just smart to have a second account somewhere else.
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I was always a supporter of local banks, and would switch to another local bank if mine was swallowed up by a big chain. However, when Bank of America started offering the no-overdraft, no fee checking account, and offered me $120 to switch my checking account to them (with no fees attached, and a really high interest rate b/c they own my mortgage), I went for it. Their online package is fabulous, and I like their “keep the change” program where they put the spare change from transactions into a savings account. I can pay my mortgage in an instant, and I can enter all my other accounts into a “my portfolio” package.
Their in-bank customer service is HORRIBLE, but I avoid it by using the computer and ATM (they have a so-so chat feature to work with cs reps).
My plan when I opened the acct was to take the $120 and move back to my local bank, but honestly, their online functions and ubiquity of ATMs has made me stay with them. Sorry, local bank.
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It’s really interesting to read all the perspectives here, especially regarding ATMs, branches, and service vs. those who have decided to go with online banks. We started PerkStreet for people who want the best value they can possibly get – especially those who prefer spending with a debit card. We give as much as 2% back to folks who use their debit cards.
We believe that most people don’t need their bank to provide branches. Branches are a major investment; we’d rather give that money back to customers. We can provide great service via the Web and over the phone. And we have a free ATM network that’s bigger than any major bank brand with branches.
When’s the last time you went into a branch, except to use an ATM? Is the choice really just between big bank and local bank?
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I agree with many of the previous comments about credit unions.
The only problem that I’ve had us this: Some of the papers that have to be signed to settle my father’s estate need a “medallion seal”. This can only be done at a larger bank, AND each signator must have an account at that bank. Lucky for me, I am the Trustee of the Trust that is at a bank. Unlucky for my son is that he must open an account with them for at least a year, in addition to the credit union account that I helped him open in high school.
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I’ve thought about this off and on. But when we married 6 years ago, my husband and I combined our accounts into his account which is at a “big bank”. Why? Because he’d had his account much longer than I’d had mine and he said that having your account at the same place for a long time helps your credit score and getting loans. Is this true or a myth? If it’s true, that’s certainly something to think about before leaving your big bank.
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