How (and Why) I Moved My Money to a Local Bank

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…

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Gail
Gail

This is great advice. I too have been dealing with Chase down the street and was considering my local credit union further down. Guess I was just used to the convenience of using ATMs without the charge from non-Chase ATMs. Wonder if they too will serve cookies? 🙂

Dr Dean
Dr Dean

I love the don’t just complain, take action part.

One thing to keep in mind, as a user of local banks for years: they don’t always have all the bells and whistles in place re electronic bill pay, and are sometimes more expensive when they do.

They also may not sync with Quicken or Mint, or other budgeting software, so you have to load that data yourself.

Small issues for some, deal breaker for others.

Cheryl
Cheryl

What a timely story for me. I just did this Friday, although in my case it involved going from a local bank (that I like) to my credit union. I already had free checking; now I will be paid almost 3.5% on my checking. After I see how it goes for a month or two, I will likely move the money from my ING accounts into my checking. The amount is small, but the way I see it, all those little dribs and drabs add up.

Bruce
Bruce

I recently opened an account at a local bank. The personalized service was refreshing. They never sell a loan to outside agencies (Big Banks or Mortgage Companies . Everything stays within the local community. The person I dealt with had been at the bank over thirty years. The best part was they are geared to service the needs of the individual. Good experience to say the least!

lilblueyes
lilblueyes

I love “It’s A Wonderful Life” … and the lesson there is timely.

I “moved my money” 10 years ago into a local credit union, only because I started working for a non-profit company that offered it as a benefit. I LOVE my local credit union, and would never dream of going back to the big banks. I wonder why folks still page huge fees to use the “big guys”. My credit union has free coffee, every day 🙂 No cookies though, lol.

Kestra
Kestra

Good article. Just one thing to add: Make sure to check out the local bank you’re considering before making the final choice. Book an appointment to just talk about their services or open one account before moving all your money. I’ve recently started accounts with two local credit unions and the service I received has been well above expectations at the one. I will slowly be making it my primary bank. At the other, it felt like they were pushing me out the door when I was in to open a high-rate savings account recently. I literally had to tell… Read more »

mary b
mary b

We started switching all our accts. about a year ago to our local credit union. They had much more customer-friendly policies and rates. My DH business account even gets free checks & deposit slips. I was thrilled to see the children’s savings accounts earning 3% instead of the measly .25% at the “big bank”. We are fortunate to have free bill pay, decent enough online banking, ability to download to personal software and they also have tons of perks like financial classes, business member perks, and a monthly business spotlight in the lobby to showcase your business! Definitely something we… Read more »

Edward - Entry Level Dilemma
Edward - Entry Level Dilemma

Good for you. I’ve always tried to be a customer of small banks. At a large bank, the tellers aren’t going to greet you by name when you walk in the door.

I have actually switched banks when my small bank has been bought by a large bank.

Nick
Nick

This is populism at it’s worst. If everyone acted like you we would have a second financial collapse. Please think before your speak.

Jan
Jan

I moved my money to a small bank when we moved to the area in 2005- and went through them for a temporary mortgage. They sold my mortgage just as fast as any large bank. Moved back to a large bank. I am now moving to a credit union for the majority of our local transactions. I still have my “bill pay” through a member only bank (USAA). One of the things I do not like about ING (Dutch)is that it is NOT an American bank- just as HSBC(Hong Kong Shanghai bank). I have lived in the countries that sponsor… Read more »

Deborah Johnson
Deborah Johnson

I switched from a big bank to a local credit union last year. I was tired of poor customer service and ridiculous holds on deposits.

I found my credit union when they had an information day at work. They were nice, answered all my questions and even called to follow up to see how banking with them was going. It was a nice change.

As a perk, my credit union has a deal with my insurance company, so I now get a nice discount on my insurance for being a credit union member.

Roxi
Roxi

Hear, hear! I was lured to CitiBank by an offer of free money with the opening of an account. It was fine for a while, when I didn’t need the money, so it could sit there gaining interest (before the crash, when there was decent interest to be had). As soon as I started wanting to move the money around, the problem started. I had auto-deposit set up from my local credit union into my Citi savings. Before long there was a glitch, which caused my auto-deposits to stop AND deleted my credit union as an external institution. This happened… Read more »

brooklynchick
brooklynchick

I totally agree. My local credit union charges hardly any fees, allows me free ATM withdrawls at McDonald’s and has great customer service.

Chiot's Run
Chiot's Run

So true. We have accounts at a small local bank (6 local branches) and I love the personal nature of it. I had a problem with one of my deposits and I went in and talked to the teller that made the deposit and she fixed it right there and apologized and refunded the fees involved. No calling a 1-800 number, no waiting on hold, no going through 15 of menus trying to find who I need to talk to, no arguing about the mistake, no having to call back a month later because they didn’t refund the fees, etc.… Read more »

TeresaA
TeresaA

Perfect timing. I am livid because Citibank just cancelled our credit card we have had with them for 20 years. Never a late payment, never over our limit. The only thing we can figure is that they don’t like our debt to income ratio (which we are working steadily to improve). All I can say, is that while we have not been the smartest financially in the past, we have certainly been more responsible that Citibank has been of late. So, this is what we deserve? I am heading to my local bank tomorrow to open an account. Everyone else… Read more »

Nick
Nick

Great article and timely. We need to start supporting our local banks and businesses. I am spending more time looking for local equivalents to most of my professional and personal business, and gladly welcome their personal touch.

Jamie
Jamie

We just did the same. Our big bank – Royal Bank of Canada – was charging us $14/month for full service. Both my wife and I were RBC clients from our teenage years to now (our late 20s). We made an appointment to see about having the fees lowered due to our years of patronage or by using a minimum balance – no luck. They offered to lower the fees, but that would include reducing account features as well. We said ‘no thanks’. Oddly enough, the branch manager tried to convince us that we’d get better, more personalized service staying… Read more »

Matt
Matt

I agree completely. I’ve been using the same credit union back home in DC as I’ve moved all across the country with the military. I did it originally because my Dad worked there, but as I started to look to other banks I had no idea of how good the credit union really was. The benefits I always took for granted are very much not standard at other banks.

I do everything remotely and I can probably count — on 1 hand — the number of times I’ve physically been inside a branch in my 25 years of patronage.

Nicole
Nicole

I just transferred a chunk of money from our online savings to our credit union savings… I like having both, but currently the credit union’s saving rates are waaaay better. Sadly our local bank doesn’t have free ATMs outside of their local CU system.

mass-o-phile
mass-o-phile

I agree completely! you can find great credit unions around the country (some with no membership requirements) and high interest rates at: http://www.depositaccounts.com/blog/

For Massachusetts natives who fit eligibility requirements (certain schools and businesses), I highly recommend UMassFIVE Credit Union. I’m getting 3.83% on reward checking and they have a pretty good web interface, too!

John K
John K

I have had a checking account at a credit union for 10 years. It is free, but pays no interest and requires $500 minimum balance for free bill pay. I have a rewards credit card with Chase because the credit union doesn’t offer rewards. I have my savings with Ally because their rates are far better. Now Ally has a checking account that is a better deal than my credit union’s – it pays 0.5%, has free bill pay with no minimum balance, and refunds all ATM fees. The only reason I am keeping my credit union account is that… Read more »

Molly On Money
Molly On Money

I’m so HAPPY to read this post. I have been advocating this same change to my friends and my readers. I think too many people feel the only choice is a big bank- there are choices out there people! I recently found a local bank that has a credit card that is not funded by the big banks. I gave up my ‘big bank’ card with it’s ‘rewards’ to support this bank and its credit card that has a reasonable APR, great customer service but no miles or cash back rewards. As I told one credit card company as I… Read more »

poofypup
poofypup

credit unions usually offer better rates because the members are the shareholders, but if you’re in nyc there is a chase bank on practically every corner. it all depends which you find more useful. making decisions because you receive greater utility is fine. however, making decisions based on populism and public opinion just seems silly. in the words of sir robert peel, “public opinion is a compound of folly, weakness, prejudice, wrong feeling, right feeling, obstinacy, and newspaper paragraphs.”

Sue
Sue

I’ve been reading GRS for a long time, but have never commented before. But I have to comment on this. I just opened an account at a local credit union. I am patiently waiting for my new checks so I can void one and use it to move my direct deposit to the new credit union. After that, bye bye PNC. I’m keeping my money in my community, and it feels great!!

Elizabeth
Elizabeth

Great article. We’ve used a local credit union (Yolo Federal) for 16 years for our personal accounts. It is like talking to a friend when you call for help, changes and issues to your account. No automated phone systems where you are bumped around and around and then talk to someone in another state who could care less. I wish we could move our car loan away from Wells Fargo. I never wanted to be a customer of theirs after leaving that bank years ago, but after they bought Wachovia we became one. Already rude behavior and inconsistencies from their… Read more »

Gary
Gary

Years ago I recognized that my local Credit Union was much more personalized than the Wells Fargo, Citi Bank. Having moved my money 15 years ago, now I see a movement by the Credit Unions toward less personalized and more profit orientation. Would I move back to a banking system because of that? Not a chance, however having experienced the best service imaginable in comparison to the nationalize banking years ago, that service is still far superior. For 15 years, I’ve even financed my homes through the Credit Union, and always wondered why anyone would use a Bank. They have… Read more »

Kristi
Kristi

I always used a “big” bank because I traveled a lot and wanted to make sure I could have access to my money in any city. These days, with everything going electronic, this is almost a non-issue. As long as your local credit union has a good, full-featured web site/online account access, it should be as easy and accessible as a big bank. I’m going to switch as soon as my last “big bank” credit card is paid off. One bit of caution to consider, though. A friend of mine moved from Iowa back to her home state, and during… Read more »

Kathy B
Kathy B

I am a long time banker – 37 yrs this month – as well as a customer of a major bank. I worked for a Credit Union for 6 yrs. I’m not saying I have all the answers, however, the postings here are only what is wrong with banks. If you had a great experience it is highly unlikely that you’d brag about it. The tellers at my major bank all know me, but I have continuously visited the same branch for 10 yrs. I have no issues with this major bank. They have the best on line system. I… Read more »

Vic
Vic

Also keep in mind that if there is a local/regional disaster in your area (hurricane/earthquake/etc), it may take some time for the credit union to have access to their funds again. One reason why I’m sticking with a BofA while living in southern California (I also negotiated no monthly fees with them).

Jules @ Lovely Las Vegas
Jules @ Lovely Las Vegas

My parents have always used a local credit union (no “big” banks). And I’ve followed suit, but have expanded a bit, too, having an online-only account as well. Sometimes my community bank hasn’t had as great of interest rates as the national corporations, but it does feel good to have that connection to my community, especially as it can be hard at times to steer away from big chains in the US for other needs.

uncertain algorithm
uncertain algorithm

I work for a large institution (one of the top three), and I would never dream of doing business with them or any other large bank. They boldly admit that they tailor their products and services to the “wealthy” clients, even though most of their products for the wealthy are poor as well.

Although they are not competitive, they do understand that foreigners will do business with them anyway (because of their name), and foreigners bring in more money than any American does (something I am no longer surprised by).

slowth
slowth

I’ll never forget this bailout. My blood boils. I’ve had my money in a credit union since I was 16, and I have no plans to move it. Thanks for reminding everyone about credit unions.

Claudia M.
Claudia M.

When I turned 12 years old, my Dad allowed me to start working for his small business during my summer break. In the first month, I made around $200 (big money for a seventh-grader). The next day, he handed me my earnings, birth certificate, and social security card before taking me to the local credit union where he and my mom held their savings accounts. My dad stood quietly beside me as the teller helped me open up my junior savings account. My first deposit: $100. When I reached college, whenever my friends would talk about fees associated with their… Read more »

Todd W.
Todd W.

I switched from a large southeastern regional bank to my local credit union a little more than a year ago. I had been with a local bank, but they were swallowed by the larger one, and I no longer felt like a customer. The switch was made easy by the C.U., as they had a “switch-kit” they used to help find all those automatic payments/credits to my account. The teller at the bank asked why I was switching. I told her directly that I felt that my accounts were unimportant to them. She disagreed, of course. I explained it’s the… Read more »

Cea Wall
Cea Wall

I don’t understand those, above, that call this article “populist”.

I switched from a large Canadian banking institution that used to ding me $10 a month for my checking account and offered impersonal service, to a credit union that does not charge any fees on my personal or business accounts. The tellers recognize me whenever I visit the branch. I get a high rate of interest on my savings.

What’s not to love?

Mike
Mike

I was very fortunate, in that 40 years ago when I moved into the city that I still live, I just happened to choose a local Savings and loan. Yes its wonderful walking into the bank, and everyone knows your name, but additionally, when this bank started online banking, they added an annoying audio commercial after you logged in. Being one who listens to my own music while I am on my computer, I wrote a friendly email to the webmaster explaining my displeasure with their commercial coming in over top of my music. I kindly asked them if they… Read more »

Barry
Barry

I haven’t read all the comments…but felt I wanted to chime in. It’s great that you walked away from Chase (or any such mega-national) to a local institution. Local institutions truly serve local communities. But don’t confuse a Credit Union with a Community Bank. They are not the same animal. Credit Unions pay no taxes…thus they are able to pay higher rates on deposits and charge lower rates on loans. Community Banks pay the full range of taxes and thus must cover that expense by offering lower rates on deposits and charging higher rates on loans. It’s just the name… Read more »

The General
The General

For me, the problem about local banks is that they are just that, local. I move around quite a bit (twice a year), so getting a new bank every time doesn’t make sense. When I settle down to a place, I will definitely look into a local credit union.

George
George

And where do the small banks do their banking? One consideration that I do not think emerges during the “big bank” vs “small bank/credit union” debate is what the small bank or credit union does with the funds you deposit. Simply closing accounts at a large bank doesn’t hurt the large banks in such a noticeable way as one would expect. Where does your small bank or credit union keep its funds? In it’s own vault? I don’t think so. Small banks are some of the largest customers of larger banks. Most small banks and credit unions do not have… Read more »

BankVibe.com
BankVibe.com

I’m extremely surprised that rewards checking accounts haven’t made more noise in today’s environment. The checking and money market accounts which the big banks (chase, B of A, etc) are offering are complete crap. The primary downside to rewards checking accounts are the monthly requirements associated with them, however, the criteria is fairly easy to meet if you make them your primary checking account. PLUS, the interest rates provided with them absolutely demolish the current national averages for money market accounts. Im talking 4-5% APY!!! Credit unions offer them more frequently than banks, but some local and regional banks are… Read more »

Neel Kumar
Neel Kumar

Do I have a story for you (pro-Credit Union)! I was in Europe and I suddenly remembered that I had not paid my property tax back in Iowa City. So, I called my credit union (University of Iowa Community Credit Union) and told them. Well… They were really reluctant at first (they had never done anything like this before) but soon warmed up to the idea. They called the county registrar office, found out exactly how much I owed, issued a cashier’s check and WALKED IT OVER to the county office. And they mailed me a letter (to my home… Read more »

DarkRydz
DarkRydz

Great post! And I heartily agree – I’ve been using credit unions ever since I got out of high school although I have taken a departure and now have an ING account as well because they offer higher interest rates than my CU. It’s also a little tougher to withdraw money so it keeps me on a better saving track.

I must say though that I wish my CU had cookies;-)

Thanks again for the great post:-)

Steven Grey
Steven Grey

Great article. I did this myself about a year ago. However there are some down sides that I would like to highlight from my experience. Depositing Checks: My wife works a part time job while she is finishing up here masters and she gets cut a physical check. We have since rectified this working with her employer, but we had to deposit a physical check. The local back did not have ATM machines that supported deposits. It required going to the bank. Now they have flexible hours, but it can be inconvenient. Online Services: They try hard. But the sophistication… Read more »

Leah
Leah

good call! I’ve got just one month left before I can be free of stupid Chase. I did genuinely like WaMu — good service, good rates, etc. I’m not happy that Chase bought them out. I’m waiting for a CD to come due (it was a 5 year CD with a great rate) before I close up the accounts. Also a funny thing: Chase did not blink when I closed all my other accounts. I think they want to get rid of the grandfathered in WaMu accounts that are way better than what Chase offers. Now, I bank with local… Read more »

Jacque
Jacque

One of the often cited cons of credit unions is not having one on every corner (like Chase or B of A). However, if you open an account at a credit union that participates in shared branching, you can make deposits or withdrawls at any other participating credit union.

More information can be found at http://www.cuservicecenter.com/. It is very convenient while traveling and I would highly recommend considering it as a factor when weighing credit unions.

Stefanie
Stefanie

My biggest problem with my experience with credit unions in the past has been a lack of customer service because of their limited open hours – 9am to 5pm M-F does not cut it for me. I don’t particularly like Chase (though I did like WaMu), but I can call them basically at any time and actually talk to a live person, which is really helpful.

Anna
Anna

I’m in Canada, and early last year I moved my main chequing account from one of the big banks to my local credit union…and I love it! They know me by name there (and even sometimes the corresponding account number!), they know where I work and what I do. I don’t like paying bank fees, and because I have my whole pay deposited to the credit union, I pay no fees for my everyday banking…no fees for ATM withdrawals on their network, no fees for using my debit card, no fees to transfer to my ING savings accounts. I think… Read more »

ed
ed

I can’t believe the timeliness (is that a word?) of this article. I just moved my investment account to my local credit union from a big bank here in Canada and sat down with my new advisor at my CU just two days ago. He told me that my old advisor was needlessly charging me unnecessary fees and locking in my funds for years without telling me. This has cost me big time which explains why despite some good investments, my account performance was not good overall, one reason I moved it. I think its good advice for anyone to… Read more »

DaveH
DaveH

Same story here — got hacked off at BofA’s actions and moved to a Bellingham, WA Credit Union (three business accounts, one personal account and my Dad’s two accounts). Very happy — one bennie is that they are very careful about security and it is not some stupid top-down security-by-managerial-committee bumph; it is well thought out security procedures both in house and online. This is a small Credit Union but their online services and bill-paying services are free and excellent. A bit off-topic: I have been a General Motors driver since the late 1970’s. Bought a new truck last Tuesday.… Read more »

LisaD
LisaD

I agree with a big BUT…I have a checking account with a local bank that carries my mortgage, and a local credit union. Unfortunatly neither one can match the online banking WF offers. I do 99% of my banking that way and am spoiled by the features. Until the others can match that I will still do the bulk of my banking with WF.

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