Can't pitch a tent at Zuccotti Park? Not to worry. There's something meaningful you can do to stand up to vampire banks that bleed the economy -- and your wallet. The feeling of satisfaction amply rewards the inconvenience.
I know. I decided to break up with my bank this week. The whole thing was an arranged marriage from the start. HSBC and I were joined because it gobbled up Marine Midland, the bank I actually signed up for in the late 90s. The truth is that my bank was taking advantage of my trust and abusing my loyalty. So I said sayonara.
Does my bank care? From a financial perspective, not really. (Although if enough municipalities, states and big pension funds move their money, that could start to hurt.) But breakups are bad for PR, and the symbolic action against the menace of Too Big to Fail is good for citizen morale.
Bank Transfer Day is the brainchild of Kristen Christian, a 27-year-old Los Angeles art-gallery owner who picked Nov. 5 as a hat tip to British folk hero Guy Fawkes. In 1605, Fawkes attempted to blow up the House of Lords and was captured and executed, but not before impressing King James with his "Roman resolution." (When asked what he was doing with so much gunpowder, Fawkes memorably replied: "to blow you Scotch beggars back to your native mountains.") If the 28,000 likes on the Bank Transfer Day Facebook page is any indication, Christian's idea has sparked a wave of populist enthusiasm. We're in a season of inspiration, and it feels good to stand up and be counted. By something other than your vampire bank's actuary. Let's get started.
1. Facing Reality
If your institution's name is Bank of America, Wells Fargo, Citibank, or Chase, you may skip this step. Your bank is a Too Big to Fail behemoth that helped tank economy and used your tax dollars as a life preserver. It's time to sail on.
Otherwise, do a little research. My own bank, HSBC, is a bit lower down in the list, but according to Forbes magazine, it's the world's second-largest banking and financial services group and second-largest public company -- what William K. Black calls a "systemically dangerous institution" (SDI). In other words, a Too Big to Fail poster child.
HSBC is guilty of several crimes against humanity, including star billing in the subprime crisis and a penchant for fighting regulation that would make the banking industry safer.
Furthermore, HSBC is currently making mind-blowing profits (they doubled in 2010). Yet it has recently sent letters informing me of jacked up fees on ATM usage and line of credit accounts. Why? Could it be that HSBC is colluding with Bank of America, which recently announced open season on customers with its new debit card fee? Something sure smells rotten.
I therefore proclaim HSBC unworthy of our relationship. If you're not sure about your bank, there's a handy tool available to help you make an assessment. In partnership with the Move Your Money campaign kicked off in '09 by Arianna Huffington, economist Rob Johnson, and filmmaker Eugene Jarecki, Chris Whalen's firm Institutional Risk Analytics offers a proprietary system that grades banks using FDIC data. Simply enter your zip code and you will find a list of high quality banks in your area. If your bank is not on that list, take a long, hard look. Small doesn't necessarily mean better, which is why Whalen's tool only lists banks which are financially sound and FDIC insured, no matter what the size.
And consider the financial advantages of escaping the clutches of monster megabanks. Smaller banks and credit unions usually give you better deals on credit cards, for example, because their business models have not relied on penalty fees and the shady practices that go along with them. They also often superior rates on loans and other services.
2. Finding a New Dance Partner
Whalen's tool will also help you find a new institution. When I typed in my zip code, a constellation of banks and credit unions popped up on a New York City map. My next steps were to make a list of the things that are important to me (easy walking distance, free checking, low ATM fees, etc) and start shopping.
There were a couple of credit unions in my hood, but not really close enough to be convenient. Even in this era of electronic and online banking, I prefer a bank I can walk to in a jiffy. Some of the small banks nearby required minimum balances on checking accounts, which spells fees, so I crossed them off the list. After comparing offerings online, the bank that seemed to fit my requirements was Amalgamated Bank, with two branches within 10 blocks.
Other than its extremely ugly name, Amalgamated is known as America's only union-owned commercial bank, started in 1923 by the Amalgamated Clothing Workers of America to serve working people. Labor unions, despite their flaws, remain a key force against plutocracy. So Amalgamated certainly beats HSBC in terms of social value. It also has free checking, lower out-of-network ATM fees ($1) and no minimum balance required on either checking or savings accounts.
You may fear a lack of ATMs with smaller banks, but Amalgamated, like many, is part of a huge, surcharge-free network called AllPoint, with machines at Target, CVS, Walgreens, and other common retail outlets. There are over 4,000 Allpoint ATMs in New York and New Jersey, and there's a web tool and mobile app that allows me to search for nearby machines wherever I am. With the ridiculous $2.50 charged by HSBC on out-of-network ATMs, I'm actually a lot less likely to incur fees with Amalgamated. The deli right across the street from my apartment has an AllPoint ATM. Yippee!
Bonus: Amalgamated is actually the bank used by the Occupy Wall Street movement, and advertises signs supporting the protesters at locations near Zuccotti Park. This cheered me as I headed to the not-so-fancy main branch on 7th Avenue in Manhattan. To my surprise, no one at Amalgamated had ever heard of the Move Your Money campaign. The young manager who helped me stared blankly as I told her all about it and peppered her with questions. An older manager quickly appeared explaining that the young woman was a manager-in-training who likely did not have Protest 101 as part of her curriculum. The more experienced manager had not heard of the campaign either, but she was vaguely aware that some folks were upset about "uh, which bank was it with those debit fees?" Okay. A little cluelessness and a surprising lack of PR acumen. But there were pro-labor signs on the wall and I got lots of spiffy brochures on services like free checking -- which includes actual rebates on debit card use rather than fees. Sold!
3. Planning Your Exit
You'll want to keep your current checking account open for a little while in order for any outstanding checks to clear and to allow time for a new account to be set up. But you can go ahead and close down your savings account. It took me exactly ten minutes to do that at HSBC and put a stop on the automatic monthly transfer from my checking to my savings account. You can get your money in cash or just transfer everything over to your checking account.
I had a fantasy of going all 99 percent on the folks at HSBC, but the only people at my branch were two friendly women behind the counter and a couple of tellers. When asked why I was closing my savings account, I politely mentioned the new fees and noted the rather low (practically non-existent) interest rates. They just smiled and assisted me. It was that simple.
The next step was to open a checking and savings account at Amalgamated. If you do automatic bill paying, you will have to switch those systems over, and that's a bit of a hassle. Banks know this, which is why they encourage customers to use them. If you have allowed any businesses to directly debit your account, contact those businesses and provide them with your new bank's information. You'll also want to ask your employer to reroute your paycheck if you use direct deposit. Your new bank will provide you with an authorization form. Then you can order your new checks and debit/ATM cards, which will typically arrive within 1-2 weeks. You should also consider ordering a new credit card and getting rid of your old one.
4. The Final Good-bye
Once direct deposits are going into your new account and you've made sure that there are no outstanding checks or automatic debits that need to clear, go ahead and close your old checking account. But make sure you follow your bank's produces for doing this or you could end up with fees for having an empty of inactive account.
I found that the whole process was actually pretty painless. Rep. Brad Miller (D-NC) has introduced a bill to ban nasty practices like exit fees to make ending your dysfunctional bank relationship even easier.
Having taken the plunge, I invite you to join me. The water feels good. And even better, no sharks.