The brainchild of Los Angeles, CA art gallery owner Kristen Christian, the central thesis behind Bank Transfer Day isn’t anything new.
For the last couple years, community activists have urged customers to move their money from large corporate banks to small community banks or a local credit union. Christian, however, taking inspiration from Occupy Wall Street, Guy Fawkes Day and her poor customer service experiences at Bank of America, worked hard to make November 5 the day to remove money from big banks.
With the first Bank Transfer Day behind us, it is now possible to examine its tangible effects.
Customers to Save Over $5 Million by Switching to Credit Union
Bank Transfer Day certainly had the potential to revolutionize American consumer banking. Bill Cheney, CEO of the Credit Union National Association stated that, “If all of the people signed up to participate in Bank Transfer Day on Saturday do so, and remain credit union members over the year that follows, those consumers will save a combined $4.8 million.”
Cheney stated customers would save an additional $300,000 in controversial $5 debit card fees that were once in motion. Combine this with the 650,000 who have already moved their money, and large consumer banks will surely start feeling it in the pocket.
Bank Transfer Day Helps Out Big Banks?
Or will they? David Grant, writing for DC Decoded pointed out potential benefits for big banks.
The financial crisis created a massive glut of deposits without subsequent loans. Thus, many customers actually hurt a bank’s bottom line by keeping accounts with a big bank. This is because banks must pay fees to the Federal Deposit Insurance Corporation, as well as overhead on managing the money.
This actually makes certain customers not profitable for bigger banks. Thus, moving your money from a large bank to a credit union might actually be a win-win for all parties involved. You win in the form of lower fees–and banks’ existing customer base becomes more profitable.
Credit Unions Come Out on Top
Credit unions are also winners in Bank Transfer Day. The Move Your Money movement already brought $4.5 billion in deposits to local credit unions.
California and Texas saw the biggest gains. In Charlotte, NC, Charlotte Metro Federal Credit Union saw 1,400 new checking accounts opened for the month of October, compared to a monthly average of 400.
Many credit unions do not keep weekend hours, but those with weekend hours did see noticeable increases in membership. Some credit unions even held special Saturday hours to accommodate the movement.
Total figures for success of the weekend have not yet hit, but anecdotal evidence suggests that many people did keep their word and transfer money to a small community bank and local credit union.
As with most forms of protest, Bank Transfer Day isn’t all it’s cracked up to be. It also comes with some interesting unexpected consequences.
Still, there seems to be a winning scenario for all involved. Banks become more profitable, customers save money on fees and communities benefit from having more money spent locally. Regardless of your feelings about Occupy Wall Street and the 99 Percent, it’s hard to say anything bad about a movement that provides such results.