November 5th is Bank Transfer Day, when everyone who keeps their money in big, for-profit banks is supposed to close their accounts and move them to a not-for-profit credit union (CU). This is different than the run on banks that preceded the Great Depression, since nobody is recommending you put your cash under a mattress. Instead, you’re moving it from one type financial institution to another.
I’m not a huge fan of the Guy Fawkes stuff (the guy was sort of a terrorist), but this event simply makes financial sense, politics aside. Since executives at Credit Unions aren’t making big bucks like their colleagues in the for-profit banks, they’re able to offer lower rates on loans, higher rates on savings accounts, and other perks, such as reimbursing you for other banks’ ATM fees. In short, their business model isn’t built around squeezing every last penny out of you, because credit unions don’t answer to Wall Street.
My biggest gripe with CU’s used to be lack of ATMs, but if you bank with a CU that belongs to the co-op network, you have almost 30,000 ATMs to choose from.
I recommend a slow approach to changing banks. It takes a month, but if you forget about any auto-pay stuff being deducted from your old account, it won’t bounce.
Here’s how to make the switch:
- Find a credit union near you and open an account there. Deposit a good part of your money at the CU, but not all. The amounts are up to you.
- Cancel all automatic withdrawals & deposits from your old bank and move them to the new bank. (This is the most time-consuming step)
- Wait a month, and check your old bank account to see if any auto-pay deductions occurred.
- Transfer the rest of your money out of your old account and close it.