If you are happy with your Big Bank, should you still switch to a Credit Union?

On one end we have the “99%” occupying not just Wall Street but public parks, bridges and roads and on the other, we have the 1% occupying everything else and who have our lawmakers literally at their beck and call. They even have lobbyists masquerading as presidential candidates and of course, all the money in the world!

But what if you don’t belong to either camp? You are not the 1% but you don’t necessarily agree with the “99%”. Isn’t it a prime tenet of capitalism that businesses should be able to charge what they please and that the market should decide what’s sustainable?

Occupy WallStreet and Move Your Money movements have cost banks dearly. The banks won’t reveal numbers, but according to the Credit Union National Association, Credit Unions added 650,000 new members bringing with them a staggering $4.5 billion in just 4 weeks!

According to the Move Your Money website, 10 million accounts may have been moved since the movement began in 2010.

“I’m happy with my Big Bank”

Switch To A Credit Union

I'm happy with my bank, should I switch to a credit union?

But what if you are a satisfied customer of a big bank? You’ve never attracted a fee simply because you were able to abide by their rules.

In short, you are not the 1%, but nevertheless, these fees don’t affect you.

Is it worth switching to a Credit Union?

For someone who is not living paycheck-to-paycheck, who has no beef with Big Bank’s minimum balance requirements, is it worth switching to a Credit Union?

Let’s say you could afford to save $500 every month for the next 10 years in your checking account. This could be from your direct deposit at the end of the month or could be from your tax refunds. But for this experiment, let’s assume you can manage to swing this. You don’t attract overdraft fees or monthly maintenance fees by keeping the required balance at all times during this period.

At the end of 10 years you would’ve earned $3,451.83 in interest alone if you switched to Alliant Credit Union.

At the end of 10 years you would’ve earned $0 in interest if you were to keep the money with Bank of America.

Alliant Credit Union pays interest on your checking, a darn good one too (relatively speaking) at 1.10%, as of this post. Bank of America pays zilch for checking accounts. One assumption I’ve made here is that the interest rate remains the same for the 10 year duration at the current rate of 1.10%. In reality this is bound to change with the prime rate. Right now this is at an all time low and will only go up in the next 10 years (so the $3,451.83 should be even higher).

If you are wondering why I chose these two banks, I have a policy of writing only about products and services I’ve used myself whenever possible. I used to be a Bank of America customer and now I am a member of Alliant Credit Union.

But do keep in mind that not all credit unions are good and not all banks are evil. But, the big banks usually march lockstep. Have you wondered why all four banks announced debit card fees at almost the same time and all of them cancelled it almost on the same day? Well the Justice Department is wondering as well. It is currently investigating the banks for anti-trust violations.

“But I’m not with BofA”

If you think BofA has been singled out, here’s what the other top banks offer as checking account interest rate (as of this post):

Citibank Checking Account Rate: 0.01%

Chase Bank Checking Account Rate: 0.01%

Wells Fargo Checking Account Rate: 0.01%

Is it worth switching to a Credit Union even if you are happy with your Big Bank?
Unless you think this is chump change, I think it is worth it. The good news is you have a choice. Laziness in this case could be costing you dearly.

How do I switch?

Bank of America has this nice resource on its website to switch from other banks to Bank of America.

I don’t see why you can’t use that to switch from BofA to a credit union.
Bank Switching Troll

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35 thoughts on “If you are happy with your Big Bank, should you still switch to a Credit Union?

  1. Very good analysis. I’m surprised at the minimal requirements to get the 1.1%. This will definitely put the pressure on the big money center banks. The banks and credit unions that did not screw up the capital structure over the past several years should definitely take advantage of the situation.

    • True Robert! Till I actually joined ACU, I kept thinking there has to be a catch somewhere! Been with them for a couple of years now and so far have been enjoying the relatively high interest rates!

  2. Wow, that’s a very good point. Quite honestly, I haven’t heard enough about the benefits of credit unions to justify switching yet. I love the conveniences with big banks, but this certainly suggests that there is a price for those conveniences that I hadn’t considered. Thanks for your analysis.

  3. Rewards and interest rates aside, I’m for the Move Your Money Argument of getting my money out of the big banks. They’re too big, too powerful, and they’re not in the best interest of the consumers a lot of time.

    To me, the plus sides of credit unions are just a bonus on top of the other things I just mentioned.

    • I wouldn’t club off the banks together. But I hate it when the big 4 or 5 banks band together and screw the customer. The latest being the debit card fiasco.

  4. I’m sure there’s always been collusion in banking, and just about every industry. Human nature?

    Hey, great new look on the blog.

    • Colluding together is actually illegal. I’m sure the big 4 banks know this, but then how exactly is the justice department going to prove this?

  5. I am not sure if I am happy with my big bank, but I am not unhappy enough to switch. If I wanted to change it would be easy because I am already a member of a good credit union (over 30 years). I would write acheck and deposit it into the credit union. I am not that unhappy.

  6. Wow that is a huge difference in interest. I didn’t realize there was that big of a spread between some credit unions and the big guys. I don’t keep too much in my checking account but long term even .5% will add up a lot faster than 0.1%. Love you site redesign btw! -Sydney

    • It does add up especially when the horizon is long. Free checking is great, but free checking with 1.10% interest on your checking is even better!

      Glad you like the site redesign Sydney!

  7. I switched from a bank to a credit union years ago and it was one of the best decisions I could make. I got much better service, paid less fees and better access to good rates. They actually treated me like a customer. I won’t go back to a big bank again.

    • Unlike banks, with a CU, you *are* the shareholder! CUs may be a little difficult to join, but definitely worth the effort.

  8. My credit union pays less than 1% on the saving account. Maybe I need to switch CU! I sent most of my cash to ING these days.

  9. Excellent point. I think I’m being lazy. Granted I am getting practically nothing on interest, the pain of picking a new bank, filling forms, and moving into a new bank is too much for me right now. Maybe I can make it a resolution for next year. Thanks!

  10. I use both a credit union and a bank. From a practical point of view its harder to get your money from a credit union so you will inevitably be forced to pay atm fees. Thats why i have bank atm.

    But cu do have cooperating networks that increase access to atms (eg mine can be used at CVS). Check them out.

    • A number of CUs refund ATM fees either upto a certain amount or upto a number of transactions per month. (I know DCU and USAA both do this).

      Or you could use your CU’s debit card and get cash back which does not incur fees.

  11. I’m pretty happy with TD Bank. The hours are better than my credit union and other banks. And the fees are reasonable. Works for me! I guess that depends if you consider TD big. There are like 3 in every town around here, but I don’t think they’ve hit the west coast yet.

    • Not a rant against all banks Darwin! :) For instance, I do bank with Ally (which probably comes under the Big Bank category), but they offer some advantages that my CU doesn’t.

      You ultimately are the best judge of what’s good for you.

  12. There is another reason to switch to a credit union. The banks are planning to add more and more fees wherever they can. So even if you’ve managed to avoid the fees so far, you need to read those mailed “changes to your account” notices to know what new fees might be applied. Or just move your money now. I love our credit union for being so customer-friendly. The personal service is amazing.

  13. I had a credit union account in the past, and found that customer service was better. A part of this is the absence of the ridiculous add on fees that some banks are purported to be charging. Getting back into a CU account is another thing on my massive to do list :)

    • I agree Squirrelers, the general perception is that the customer service is better with CUs. But then some big banks too have excellent customer service. That’s why I wanted to highlight the hidden benefit of joining a credit union – more money in your pocket!

  14. What a huge difference! I’m happy with my bank’s new rewards saving/checking interest policy (3.5% on checking balances as long as a minimum is kept in savings); they rolled it out when BofA started making such a stink, and I think it saved them from losing a ton of customers.

  15. I don’t always think Credit Unions are better, though they can be. People shouldn’t forget that if they manage their accounts responsibly, they get better access to ATMs and have more services at a big bank.

    • Credit unions like USAA reimburse ATM fees and offer services like any big bank including investment services.

      But unlike Banks, CUs don’t have to answer to shareholders – which could result in better customer service and more savings for the customer.

  16. Ken deGruchy Jr says:

    I have been using the Fox Credit Union (Twentieth Century Fox Film Corp.)http://www.foxcredit.com/, for over 20 years now and have been very satisfied. Even though they only have physical branches in CA and NY it does not seem to be a hinderance if you are comfortable with all of the electronic banking scene that has become comonplace these days. I managge my savings and checking accounts online. If I needed a bank drawn up I guess I would have to have it mailed to me. I still use a big bank but this article is getting me to rethink the situation.

  17. Hi MC – I like your policy on writing about products you only use yourself. We ditched our big bank some time ago in favor of a regional bank, and even now are thinking about a switch to a local CU.

  18. I love my Charles Schwab checking account, even thought it is a big bank. They give me unlimited ATM withdrawals and pay back any ATM fees and unlimited checks. I keep most of my money in savings accounts that are similar to the interest bearing checking accounts and the reimbursed ATM fees make up the little bit of interest I lose by having money in non interest bearing checking account.

  19. Of all of these comments not a single person points out the MANY large banks that have a high online savings rate?

    Banks such as ING Direct (now owned by capital one), HSBC among many others offer a very competitive interest rate.

    Big bank or small you should never keep your money in an on demand account (checking) and should find a savings account that pays a high rate.

    Note with those savings accounts you are only allowed 5 withdrawals a month (pretty sure a regulation of sorts regarding the classification of the account) so you should still maintain a checking account for day to day needs.

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