If your bank's too big to fail, make it smaller: what to know about moving your money

November 30 |
© by Sasha Y. Kimel, used under Creative Commons license.

On Bank Transfer Day I learned something new: lots of people are curious about switching to a new bank or credit union, but they aren't sure where to start.

In case you're one of those people, here's the lowdown on how to move your money from a national bank to a locally-based financial institution. I moved three sets of accounts last month — two business accounts and our household accounts — from Big Ass Banks to a local credit union. Here's what I learned.

Research your choices: credit union versus local bank

Credit unions are customer-owned not-for-profits. They are often designed to serve a specific neighborhood or population, and clients are MEMBERS — not customers. Members have more say in what their CU does than do customers of a bank — which can mean they have greater ability to dispute credit card rate hikes or contribute input on the CU's board of directors.

Now, one of the main concerns I heard during the march on Bank Transfer Day was from people who feared their credit wouldn't pass muster, but when I opened our new accounts, Veridian Credit Union only ran a check on me for the purpose of overdraft protection. It was an easy-to-decline option. From my non-scientific on-the-internet surveys, I've found other people had the same experience and only required a credit check if they wanted a line of credit. One person reported their credit union ran a credit check just to open an account, but if you're worried you only need to ask ahead of time.

Locally-owned banks often offer a wider range of services than credit unions, and can be easier to open accounts with. The most noticeable difference is usually that credit unions are more likely to offer interest-bearing savings and checking accounts. That said, I was with a two-branch bank for years, and loved them dearly.

Pick a new joint

Bauer Financial offers simple star ratings of US banks and credit unions. Check out your current financial institution and compare it to other suitors in your area before you commit. You can order more detailed information for a fee, but the free ratings are enough to get you started, for sure. Between rating agencies and institutional web sites, you should get a good idea of bank or credit union policies before you make a visit.

Ask if there's a transfer kit

Many institutions offer help in moving your money over smoothly and quickly. Cut the hassle and let them help you out.

Gather important information

Write down any automatic payments you'll have to set up in your new institution. Bring at least one form of ID, two pieces of mail with a current address, and the amount needed for a minimum deposit (just $5 per account for me). If you're opening a business account, you will need the document assigning your business' Employer Identification Number, as well as the help of any partners you may have.

Give yourself ample time!

It's smart to open your new account, move most of your money over, and set up new automatic payments. When everything's securely stowed, you can close out the old account and say sayonara to the big bank.

So you'll need time to wait for new checks and debit cards to arrive, but you should also make time to open the accounts themselves. I visited a busy branch on a Saturday and spent most of three hours setting up my new accounts — BUT! That included waiting in line, and the fact that I opened three new checking and three new savings accounts. During that time, I was happy to learn all about how my new credit union worked from Cecilia, who is my new credit union best friend.

It's a little bit of work to move your money, but when you do, you'll be speaking out against bad practices which have endangered the world economy AND you'll support businesses which keep dollars closer to home. Not to mention you might be able to make your money work a little bit harder for you.

  1. There are some great posts floating around right now on how to make sure you move your accounts in a way that makes sense and protects your money. This one's pretty good: http://www.ehow.com/how_5530211_change-bank-accounts.html.

    Some credit unions are only available to employees of a state or federal government, but many allow members to join if they live (or work!) in certain zipcodes. And once you're in, you're usually in for life and you can bring all your relatives in, too! Bonus!

    If you're worried about ATM fees, almost every credit union has free access to ANY OTHER credit union ATM, including at almost every 7-11 (the more you knooooooow).

    Finally, you might not have to go into the bank itself! Our new credit union had an online application and credit check. I'm almost all the way through the process now and I haven't had to go in once!

    In conclusion – doooooooo ittttttt.

    6 agree
  2. Just as an anecdotal note: my partner opened a credit union account here in Denver 3 years ago when we were trying to get in college…hasn't touched it since that day, and the $5 is still there. No fees, no closing the account. It's there when we need it, AND they are ALWAYS super helpful. My partner's parents (well mom) have had a credit union account for 20+ years….no hidden fees, convenient and the money is always there!
    YAY for small businesses!
    and YAY Offbeat Empire for supporting them!!!! Thanks Cat <3

    2 agree
  3. our family belongs to our local credit union for family banking and most daily life expenses and i have a personal account at a locally-owned bank (that i've had open since i was 4 years old) which is used exclusively for child support transactions. we have always had excellent service at both institutions; we are always addressed by and known by our names, we get amazing service and the institutions are more than accommodating when it comes to the occasional financial snafus. we love these small institutions and would recommend them to anyone who is looking to support small business, make wise financial decisions and eliminate unnecessary stress from their lives!

    0 agree
  4. I actually work at a small locally owned bank and we help customers move their accounts all the time. Usually there are lots of options for help and people willing to just sit and tell you all the details before even getting started!
    Another note on ATM fees: alot of institutions now have accounts where a certain number of 'foreign'(not owned by that bank) atm fees are waived each month. Definitely look at the different account types to determine which is the best fit.

    0 agree
  5. I've only ever used credit unions, but there's a couple of things to keep in mind:

    I was once traveling in Europe and had a ton of trouble using my credit union cards. My parents had to help with their "real bank."

    Another time I was subletting my apartment to an international student. Since she needed to secure a place to live before she got to the states, she had to wire her money to me, but it was impossible because I had a credit union and no time to open a bank account, and her bank flat-out refused to work with a credit union. My parents again stepped in with their "real bank" to handle the transfer for us.

    So, it might not be a bad idea to have a back-up large bank for idiosyncracies like that. Unusual situations do pop up.

    0 agree
    • So weird! Thanks for sharing — I'd never have known.

      You could also use Paypal or Dwolla or Square for similar situations. Take payment digitally, and transfer to yourself. You usually pay a little in fees (3%, 25 cents, and 15 cents + a percentage, respectively) but they can be super useful.

      2 agree
      • When I was living and working in America and needed to transfer my money each month back into my UK bank account (mainly to pay for the plane ticket that got me out there) I actually found that PayPal was quicker, easier and cheaper than a wire transfer, even between big banks.

        You do need to give them a few extra details and confirm your identity to send or recieve large amounts but I think it took me 5 minutes total.

        0 agree
      • Oh, cool! This all happened before paypal was really big. I'm glad there are more options now.

        0 agree
    • I have had my account with a small local bank for years, and when traveling, I warn them ahead of time, lest I trigger a fraud check where they call me and ask if I'm really in Idaho (yes, I really went to Idaho and now I'm in Montana, bank. It's okay!) and that's been fine. So it's something to be aware of. But I love them dearly. They're wonderful.

      0 agree
      • That problem isn't at all exclusive to small banks – I have a credit card with a huge bank (which I'm keeping b/c they don't charge extra fees for international transactions) and they ALWAYS call me when they see anything that doesn't fit my usual spending habits or if I make a purchase too far from home. I keep things running smoothly by calling them before traveling or ordering something from a distant retailer.

        0 agree
        • Completely off topic, but I had a humorous interaction with American Express along these lines. I was doing costume design for a huge show and they called me up "Did you actually order $100 in feathers? What about 4 motorcycle jackets? A few dozen t-shirts?" Eventually I was just preempted them and told them that every strange purchase was legitimate unless it happened after March. I was glad they called though. Made me feel secure.

          1 agrees
        • My husband gets calls from his Big Bank about twice a year, saying they are worried about fraud and requiring him to verify that, yes, he DID buy a Papa John's pizza… just like he does every week. It's very strange, and doesn't make me feel particularly secure. Especially when they let slide purchases made in a random state for actually strange things.

          0 agree
          • True story: We'd meant to switch for so long because Wells Fargo was so bad with our business account that they've screwed up every single interaction we've had with the bank. About a week after closed it, my husband got a call from the back that there was a problem with the account — the teller helping us hadn't done the math right. There was $9 left in checking. The cards were closed, but our checking and savings had not been closed.

            Except they didn't call about that. They called because, when the account tried to draw a fee and triggered an error, someone realized that they'd never gotten his signature when I was added to the account LONG AGO. He'd called in over the phone to authorize the teller to add me, then I came in alone. So, that could have very easily been a scam and I could very easily have left with all the business' money.

            tl;dr: Wells Fargo can bite me.

            2 agree
  6. So here's my conundrum:
    I've been with a credit union for evah with my checking and savings accounts, but our mortgage started out with a smaller bank, then got sold to Bank of America (d'oh!). I have asked a couple of people about switching it to a credit union, but have been told that often they end up selling them to BoA or someone just as evil. Can anyone enlighten me about this issue?

    0 agree
    • I'd also LOVE to hear about this. Our mortgage has been sold four times in its first year, and I hate dealing with US Bank for it. Bad customer service alone makes me want to quit them, but as far as I know I have no control.

      0 agree
      • Although I am a credit unioner for my banking, my mortgage is through a smaller regional savings and loan. They don't sell their mortgages and they say so. I don't know if this will be of any help to anyone else. I have heard that banks are the worst when it comes to mortgages and places where mortgages are mostly what they do all day every day are the best, but this is all hearsay.

        0 agree
    • We haven't lived in our house a year yet and our mortgage has changed hands four times, two in the first week we lived here! Now it's with BoA, and we haven't had any problems, but I don't like that mortgages can change hands without you knowing or consenting. Our mortgage loan started with a small, local bank because the larger banks wouldn't give us the rate or terms we wanted. Ironically, that's where it ended up anyway.

      0 agree
    • We got ours through our credit union and it was sold with in a week to Citi. So if we ever ARE foreclosed I don't have to feel like I'm screwing over my credit union because they already got paid :-P I'm not very hands on, so it doesn't really matter to me who holds it now since they're bound to the same terms we signed on to.

      0 agree
  7. I lust after a credit union, but have been rejected because of my bad credit (let me add -flawless banking history! but I defaulted on student loans and even though I'm back in good with payments, my score is terrible).

    I wonder if getting a regular checking account at a small bank would be easier.

    0 agree
    • Try a different credit union! Or a small bank — no credit check there.

      0 agree
  8. Thank you for posting this. My bank recently got bought out by Wells Fargo and I want OUT! Only thing that's been stopping me is not really knowing how to transfer my student loan payment to another account. Unfortunately the company that controls my student loan has the shittiest customer service on the planet and has been utterly unhelpful when I call them.

    0 agree
    • That SUCKS. If you're interested in refinancing, you might start with the company you want to move to. They may be willing to wade through the shitty company's pitfalls for you.

      0 agree
      • Hmm, I haven't even thought of that. But my student loan rate is already so low (3.5%) I can't imagine I'd get a much better deal on it.

        0 agree
  9. I switched to a credit union shortly after the bailouts in 2008. They ran a credit check on me, but were fairly lenient about my poor credit score. They only made me pay one thing off before I could open an account. However, when I got married and tried to get on my husband's Bellco account, they flat out turned me down. Told me to pay everything off and try again in a year. I'm working on paying things off, as I have been for years, but not having a bank account makes it more difficult. My advice to those consideting a switch to a credit union – go for a local one, not Belco.

    0 agree
  10. You might like this direct action protest I took on my own against one of the big banks. I called my credit card's customer service line to do some negotiating. Having a bit of leverage, I thought it presented a great opportunity to mess with them a little and make a few points about the unfairness of the credit card lending system. I made a video of the call and posted it on my blog along with my comments about what happened, and a fuller director's cut transcript. It is quite funny even if you are pro-megabank. Since it's a protest at home, I called it my Kitchen Counterstrike Against Bank of America. http://www.ragingwisdom.com/?p=508

    1 agrees
    • Bloody hell that's great!

      I have had my own issues with BoA…

      0 agree
  11. This is neither a credit union nor a local bank, but Charles Schwab was listed as one of the 8 least evil banks (http://money.cnn.com/galleries/2011/pf/1101/gallery.least_evil_banks/8.html). If you travel a lot, are technically savvy and prefer phone customer service to in-person customer service this is a great bank. There are no ATM fees–anywhere in the world, with any company's ATM (they'll even refund you the fees charged by the ATM). You can deposit checks on-line with your smartphone or mail it in. There is also no minimum balance or fees. They also have amazing telephone customer service-within a couple of seconds I'm talking to a live, helpful person.

    3 agree
  12. I opened my first-and only-checking account with the credit union affiliated with the government agency my father worked for 20+ years. Never a problem and there's a branch just blocks away from my workplace, if I need to deposit a check, etc.

    0 agree
  13. My university has a student-run credit union that I use. The only reason I can't switch fully over is because home and university are 600 miles away from each other, so I have a bank in each place. But once I settle in one place I'll definitely do the credit union!

    0 agree
  14. it is my personal opinion, both from experience & my current job in a large bank, that you shouldn't "put all your eggs in one basket." i have accounts in both a credit union & a "big bank." i love the credit union b/c it's usually easier to get financing for bigger life "events" there (my car was financed through them, for example), along w/ better interest rates. but i also love my bank b/c it has branches all over the country which is helpful for traveling purposes, general use, etc. at the end of the day though, it's all about making the right choice for what's best for your own banking needs, be that credit union, local bank, big bank or any combination of all these.

    1 agrees
  15. Has anyone ever heard of USAA? It's only for US armed forces members, veterans, or their families. They do all kinds of things (like insurance), and I have seriously had the best experiences with them. Just discovered that they do checking and (actual!) savings accounts, so I'm getting ready to make the switch. They don't have many physical locations, but I have always dealt with them on the phone, and they never have strong accents (no offense to anyone, but when i'm panicking over a potentially major financial decision/problem, I simpy can't focus enough on translating someone's accent in order to fully understand the situation), and they're always pretty darn friendly. Just a heads up to anyone in the Army/Navy/etc. (or their families or veterans) because they really are great in my opinion. My husband is switching over with me, because we're both fed up with Chase.

    1 agrees
    • yes! my FH got in because his dad is a vet; everything that needs insurance is with USAA: home, cars, motorcycles; credit card, too. and FH also just discovered the checking/savings account options and he'll be switching over soon – and once we get married, i'll also make the switch, yay!! i concur with the great customer service; anytime i've heard him on the phone with USAA, it is always a good experience. you can also refi with them. once i'm gainfully employed, we're going to refinance the abode with them – they had better rates than Chase does (who we currently have the mortgage with). of course, that shouldn't really be a surprise, but glad they are an option other than Chase or other big banks!!
      high five to the husband for switching over with you!

      0 agree

Join the conversation

Your email address will not be published. Required fields are marked *

No-drama comment policy

Part of what makes the Offbeat Empire different is our commitment to civil, constructive commenting. Make sure you're familiar with our no-drama comment policy.

Biz owners & wedding bloggers

Please just use your real name in your comment, not your business name or blog title. Our comments are not the place to pimp your website. If you want to promote your stuff on Offbeat Bride, join us as an advertiser instead.