Bank Transfer Day: Are You In?

The concept of Bank Transfer Day only sprung up this past weekend and already the social media driven initiative has gone viral and gained media attention worldwide. The Facebook campaign is urging Americans to close their accounts at large banks and place their money in local credit unions by or on November 5^th in order to show contempt for bank conglomerates, such as Bank of America, who are increasing and establishing new debit card fees at a time when Americans continuously feel the security and stability of their own lives slipping away. 

The page, now supported by over 28,000 who have indicated they will make the switch, states that “Together we can ensure that these banking institutions will ALWAYS remember the 5th of November! If the 99% removes our funds from the major banking institutions to non-profit credit unions on or by this date, we will send a clear message to the 1% that conscious consumers won't support companies with unethical business practices.” After all, not only is mainstream still suffering, but U.S. bank executives continue to enjoy large salaries and bonuses – even after accepting large federal bailout funds.

Whether you’re in or out, there are several distinctions between a credit union and a bank you should be aware of so that your choice is based on more than heightened emotions or the latest buzz.  Here are a few to consider:

•     Credit unions are member-owned. Once you establish an account at a credit union, you become a part owner. That doesn’t mean you can walk in a branch and do whatever you want, but it does mean that you receive higher dividends or interest rates because there are no private investors to be paid first. 

•     Credit unions are not-for-profit. This type of status is why interest rates tend to be significantly better, and fees fewer and smaller, at credit unions than at banks. Again, any profits credit unions do make are distributed as dividends to their members.

•    Credit unions are exempt from most state and federal taxes. This allows them to avoid the need for creative fees that many banks come up with to pass on to customers.  The average penalty for overdrawing an account with a credit union is between $20 and $25, whereas with a bank, fees are usually in excess of $34.


Related Post: 10 Ways to Avoid Overdraft Fees

Good 'Ol Joe

Proverbs 27:12
The prudent see danger and take refuge,
but the simple keep going and suffer for it.

Sometimes I think I should’ve gotten out when Joe did. Joe was the broker that owned the mortgage company down the hall from mines. At least once a week, I’d bump into Joe in the parking structure and with his skinny cigarette dangling out the corner of his mouth, he'd mumble something random and rather pessimistic about the real estate industry.

One day I drove up to the office and noticed that the maintenance guy was painting over Joe’s company name on all of his reserved parking stalls. I couldn’t believe Joe had moved out without saying goodbye. I wondered what happened to all of his staff. The week before, everyone looked fine – no sadness at all that I could detect.

Less than a month later the lender that we funded most of our deals with had folded. We had two deals literally at the brink of closing and with one e-mail and hardly any explanation, the deals were dead and finding a bank to revive them seemed impossible. With a full pipeline of loans, we thought surely something would change, so we just kept plugging along. And things did change: banks continued to tank and so did home values. The market that had made me a very well off young entrepreneur directly out of college, began to suck everything I had worked for completely dry.

When I think back to all of my random encounters with Joe, he was always talking about what the paper said and what information he had gotten from one place or another. He was a member of tons of industry organizations – even the ones that no one had ever heard of. He knew his industry and sought the wisdom that was necessary to know when to stay and when to go. Had I only listened to good ‘ol Joe, I may have closed my doors sooner than I did and had tens of thousands to show for being prudent and taking refuge instead of being simple and suffering for it.

The good thing is that I’m forever humbled by the experience. Two years have passed, but I will forever choose to . . . .

Seek Wisdom, Find Wealth & Be Blessed!