Credit unions and small banks across the country reported a boon in account openings this weekend thanks to the Bank Transfer Day and Move Your Money initiatives. Both grassroots efforts, the movements encouraged consumers to use their money as their voice in protest over increasing banking fees from the larger institutions.
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The National Association of Federal Credit Unions (NAFCU) reported a tripling in new checking account openings this weekend in several cities nationwide, including Seattle, Charlotte and Maryland. According to the Credit Union National Association (CUNA), around 650,000 banking customers opened new credit union savings accounts in October, totaling more than $4 billion. The NAFCU also reported a 700% increase in new account openings last month compared to October 2010.
According to the Bank Transfer Day Facebook page, the movement was started to protest the additional fees proposed by major banks including Wells Fargo (NYSE:WFC), Bank of America (NYSE:BAC) and JPMorgan Chase (NYSE:JPM). The banks all proposed debit-card usage fees of $3 to $5 per month. All three banks retracted after customers backlash.
While it’s too soon to tell if the movements will have any real impact on the big banks, early data shows consumers were outraged enough to make the switch.
“This was really a vote for Main Street over Wall Street,” says NAFCU spokesperson Patty Briotta. “I think it’s no coincidence that the Charlotte metropolitan area is where Bank of America is headquartered, and that is one of the cities where we saw the most new accounts opened.”
Although most federal credit unions were closed on Saturday, Briotta says that many new accounts were opened online. Even though this weekend brought in many new customers, new account openings have been increasing for the last three years, she says.
“People have been getting frustrated with their banks since the downturn in the economy, but the most recent announcement of fees created that additional sensation of frustration that made people turn to credit unions,” she adds.
CUNA reported an estimated 90,000 new consumers signed up for accounts at California-based credit unions during October, and an estimated 47,000 new members at credit unions in Texas.
In Austin, Amplify Credit Union hosted a special “Walk Away From Bank Fees Day,” event on Saturday, and gained more new members in a single day than they do in a typical week, according to a bank spokesperson. In Michigan, Dave Adams, CEO of the Michigan Credit Union League, which operates 325 credit unions in Michigan, says that many credit unions reported a doubling or tripling of new account activity during the month of October.
In a typical month, Michigan’s second largest credit union, the Lake Michigan Credit Union, opens around 779 new checking accounts. During October, that number skyrocketed to 2242 new accounts. Similarly, at the United Federal Credit Union in St. Joseph, Mich., 508 new accounts were opened in October 2010, but this October that number jumped to 1,030, according to Adams.
“We have credit union after credit union reporting this kind of activity, literally double to triple the amount of accounts usually opened,” says Adams. “Of course all the hoopla over Bank Transfer Day and all the opposition to fees helped out, but what we are really seeing is that existing credit union members are bringing more of their business to the credit union.”
Historically, credit union were used for home or automobile loans because they tended to offer better rates, but they didn’t serve as consumers main bank. But now, more members are brining turning to credit unions for all of their banking needs, including credit cards, checking accounts, saving accounts and debit accounts, says Adams.
“I have some sympathy for the big banks. All financial institutions have been hit hard by Congress’ regulations and the down economy, but I don’t sympathize with their desire to make up those shortfalls by charging fees on basic financial services,” says Adams. “With the Occupy Wall Street movement in full swing, it was a huge blunder on their part to try to collect more fees from their middle class customers.”
Interestingly, Adams says that some of the new customers to credit unions this month aren’t the typical users. Many member banks in the Michigan Credit Union League are starting to see higher income members, many brining more than $1 million in assets to their local credit union.
“Even people with a higher income are unhappy with big bank fees, and while I hope we continue getting new membership, at the same time I hope big banks get their act together, because we need a strong banking system. Runs on banks or massive shifts of business from one bank to another isn’t good for the banking system as a whole.”