Thursday, December 31, 2009

Break Up With Your Big Bank: A New Year's Resolution

Big banks: They squeeze us for ever penny. They gamble with our money. And when they lose, our tax dollars bail them out. Then, instead of using bail-out money to keep credit flowing, they give huge bonuses to failed CEOs. All the while, they are using our money lobbying Congress to defeat any reform that might bring sanity to our financial system.
Now imagine a world where banks are not-for-profit organizations where surplus funds, after ensuring reserves, are distributed back to the members as dividends and better rates on loans. Imagine if each member had an equal say in the governance of the organization, regardless of his or her account size. Imagine "banks" that are democratic, member-owned cooperatives.

This world exists and these better-than-banks organizations are called credit unions.
I am in the process of moving my own money from Bank of America, where it is used to lobby against causes I support, to a credit union, where it will grow at a better a rate and help provide good loans to other members. For me, the final stroke was when Bank of America, three days after receiving $25 billion in federal bailout funds, hosted a conference call with conservative activists and business officials to organize fundraising against the Employee Free Choice Act. It made me nauseous to think that the money in my checking and savings accounts, the interest I'm paying on my credit card, and my federal tax dollars were helping to make the country a worse place.

So I ask you to make it your New Year's resolution to break up with your big bank and marry a credit union. It is in your own immediate self interest, since you'll get better dividends, cheaper loans, and better service with a credit union. And it will benefit the country in the long run by dispersing financial power from the banking behemoths--like Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo--to ordinary Americans.

Here's one way you can locate a credit union near you.

The timing of this post is inspired by, and intended to amplify, the new effort launched by Arianna Huffington and friends to encourage people to move from Wall Street banks to Main Street banks. Check out their video, which plays off of It's a Wonderful Life, and then see the new site
Huffington's "Move Your Money" movement is excellent. I just have one quibble with it. They ask people to move from big banks into small banks, and they only mention non-profit, democratic credit unions as an afterthought. It really should be the other way around: Ditch your big bank, and get into a credit union. If you can't join a credit union, go with a small, community bank. After all, small banks can be bought by big banks, and many small banks are working to become big banks. Again, it's a minor quibble. If we can all agree on the first part of the plan, moving our money out of big banks, we will be doing great.

Here are some resources to get you started:
Let us know if you are making the move. Or, if your money is already in a credit union or community bank, how has your experience been?


Elizabeth said...

I'm proud to say that our checking account is with our local credit union. But here's the problem. Where do you draw the line? We have money with different mutual funds, plus an investment bank...and the growth is obviously much larger/faster. None of these funds received a bailout, but most are also not socially responsible in the investments that they choose (one is.) And I highly doubt they're Progressive.

But every time we fill up our cars with gas, we're supporting a lobby that most Progressives probably don't. Every time we eat at a fast-food restaurant, we're supporting another non-Progressive lobby. Etc. Etc.

So what do we do? I believe in baby steps, but isn't it sort of overwhelming when you really think about the hold corporations have on us?

Becky said...

Thanks for this post. I saw the headline on Huffpo but hadn't really looked at it. The bummer is, I don't think we qualify for any credit unions. Which is totally bogus. Why is their membership limited? I'm looking at the pages you linked though.

Dave said...

Elizabeth, it is overwhelming if you think of it all at once. But switching from a big bank to a credit union (or a small bank) is an easy baby step that offers immediate personal benefits. That's why it is a great place to start. I think everyone who is able should do their basic checking and savings with a CU and get their basic loans, including credit card, from a CU. From the looking around I've done, you will generally get better rates on all of these things with a credit union than with a big bank. This doesn't mean you need to dump whatever other investments you have. But I think shifting the basics that I list above from bank to credit union is easy enough and quickly beneficial enough for it to sort of "go viral" and make a difference.

Becky, I'd be surprised if you don't qualify for any. A lot of CUs are geographically based instead of employer based. I think over time they have opened up more and more. It may be that everyone in your county can join the teacher's credit union or something like that. I would start here:

As for why their membership is limited, it probably has something to do with for-profit banks trying to keep the laws that way. Same reason health insurance companies oppose both a federally-administered public option and local co-ops: they don't want people to realize that we don't really need mega corporations for many things, like basic banking and health insurance.

Wifey said...

I have been fortunate to belong to a credit union for about four years or so. The service I get is absolutely fantastic. The credit union is based in Washington D.C., so the only drawback is that it's not close by. But every other aspect is golden. Very low APR on credit card (9%), easy access to loans, very quick access to knowledgeable and nice folks on the phone, e-deposits, I had forgotten to pay a bill and they offered to remove the late charge.... I could go on and on. Even if the banks weren't as you described, I'd still be with a credit union.

Also, they offer money management options, insurance options, the works. There's always a way to at least try to be aware of what your money is doing.

Dave said...

That's good to hear. I just joined my credit union (also in DC area), so I haven't yet had much experience with their service. But what you're describing seems to be what I hear from other credit union members too.

Credit unions say they have "members" and banks have "customers." And I think that is a good way to describe it. The whole philosophy of a credit union is about being an empowering financial service to its members, who jointly own and run the organization.

Wifey said...

Did you join Congressional FCU?

Dave said...

Nope, after comparing a few that we were eligible for (Congressional FCU wasn't one of them), we joined Navy Federal.

Wifey said...

Nice! Congrats, hope they take great care of ya'll. One of the benefits of working for a congressman for awhile was membership at this credit union. You get it for life, and can even get family members in. Even after repeated conversations with my family, they'd rather stay with banks out of convenience. I'm sure the mortgage rate and customer service we'll get when we buy a home soon will convince them :)

taylor Jackson said...
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