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 5th 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.