Bank Transfer Day, Credit Unions, And The War On Wall Street

Author: Tim Chen
Published: November 02, 2011 at 1:19 pm
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Ever heard of Bank Transfer Day? A week or two ago, your answer would likely have been no. But the holiday devised by Kristen Christian, a disgruntled LA art gallery owner, has gained steam rapidly. If you’ve missed the buzz, let me fill you in: This Saturday, November 5th, will mark the first ever Bank Transfer Day, a holiday meant to inspire the masses to close their accounts at big-name banks like Bank of America and Wells Fargo and shift their finances into credit unions and smaller for-profit banks.

The reason? Christian, along with my great aunt, your best friend, and the neighbor’s dog, is fed up with the high fees these banks are charging for essential services like checking accounts and debit card transactions. While an increasing number of big banks are backing down from the fees they’d announced or implemented in recent months, this isn’t likely to dissuade thousands of accountholders from moving to greener pastures.

Beyond free checking and debit cards, consumers stand to find better interest rates as well. According to NerdWallet’s analysis, credit unions’ savings accounts give nearly twice the interest rates as big banks’. In addition, they tend to offer lower interest rates and fees on credit cards, many eschewing penalty APRs and cash advance or balance transfer fees.

Consumer dissatisfaction with the banking status quo is great news for credit unions, which have long struggled to compete against big banks. Currently, credit unions serve only about 6% of American consumers, a number that has remained steady for the past few decades.

Whether Bank Transfer Day and, more generally, the current atmosphere of distrust and outrage over banking practices drive consumers to move en masse to credit unions, remains to be seen. But you’d better believe the credit unions are cashing in on Bank Transfer Day. In honor of the holiday, many are extending Saturday hours, and some are offering special promotions for people who become members.

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Article Author: Tim Chen

Tim Chen is founder, CEO, and chief credit card nerd at NerdWallet, the web's best site for unbiased and uncensored credit card information.

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