I have a confession—I belong to a credit union where I have gotten good rates and service for the past five years, but I still do the bulk of my banking at a large national bank.
I'm not proud of it, but I opened my first account at a bank in 1994. I know my account numbers, routing numbers, credit card number, and even the three-digit credit card verification number by heart. I know where all the ATMs are within a 10-mile radius of my house and my work. It's just easy to keep doing what I've always done.
CUNA estimates individuals save $69 each year by doing business at a credit union over a bank.
But I'm at the end of my rope—I can't handle any more aggressive sales pitches from tellers when all I want to do is cash a check or get a roll of quarters. I'm tired of spending 15 minutes on the phone trying to convince the customer service rep that the fees charged to my account are unjustified, and I fear needing to use my bank credit card someday with the interest rate as high as it is.
If you've been thinking about making the change but are afraid it will be too complicated, stay with me...we can successfully quit the bank together. If you need a little more convincing, I have a few facts that should swing your vote to the greener grass on the credit union side (or reinforce your satisfaction if you're already a member):
- The Credit Union National Association (CUNA), Madison, Wis., estimates individuals save $69 each year, in the form of lower loan rates and lower or no fees, by doing business at a credit union. Credit unions exist to serve members, not to turn a profit. Patrick Keefe, vice president of communications at CUNA, sums it up well: "It's really a question of focus—do you want a financial institution that is thinking 'How can I best provide a financial service to this person?' or 'How can I best make a buck from this person?' " It's hard to argue with that. Mind you, you have to go all-in at the credit union to see those annual savings—if you're a casual member like I have been (so far), you will not realize the same degree of benefit. All the more reason to make the switch complete.
- Convenience arguments don't hold much weight. Many credit unions are part of a larger network of ATMs that are just as convenient as your current bank. An example is the CO-OP Network, which gives members access to more than 28,000 ATMs nationwide, but there are other networks as well. Smartphone users have it even easier—an app uses your current location to find the closest ATM. Simple, right?
- According to a February 2012 Consumer Reports article, more bank fee hikes are on the way as banks try to recoup billions of dollars in lost revenue. More fees for the same or lesser service? No thank you.
Now that you've made the mental commitment to ditch your bank, it's time to put an action plan together to make the switch a reality. Follow these easy steps to make the transition:
- Find a credit union. ASmarterChoice.org is a great place to start. Although not everyone is eligible to join every credit union, there is a credit union available to everyone. Some are organized by employer groups, others by geographic regions, and still others by different criteria. Start by entering your address into ASmarterChoice.org's "Find a Credit Union"® search tool to find a credit union you qualify to join.
- Review credit union credentials. Most credit unions are backed by the National Credit Union Administration (NCUA). The NCUA is the FDIC (Federal Deposit Insurance Corporation) of the credit union world. The NCUA insures most accounts up to $250,000.
- Confirm available services. Many credit unions offer all the same services as banks, but it's a good idea to confirm that the credit union has everything you're looking for. For example, ask about online banking, credit cards, auto or home loans, small-business loans, or IRAs (individual retirement accounts).
- Join your new credit union. You can join in person, and some credit unions even let you join online. Deposit a small amount in your new account to start before you work on the full-fledged transition. Figure out how to use the online banking, and get familiar with branch and network ATM locations. Joining a credit union also makes you a member-owner immediately—that's kind of awesome in and of itself.
- Change your direct deposit information. If you get paid by direct deposit, figure out when your employer will be able to change your deposit to a new account. If you don't know how to make this change, contact your human resources department.
- Identify your current automatic withdrawals. Make a list of automatic deductions from your account(s), like credit card or utilities payments. Depending on the direct deposit date you identified in step five, reschedule your withdrawals from your new credit union account after your first paycheck is deposited in the account.
- Transfer the bulk of your money to your new account through electronic transfer. If there's a sizable fee for electronic transfer, consider asking for your money in a check, then deposit it in your new account right away. Leave some money in your old account as a cushion. It can take a few months for all transactions to clear your old account. Note: Some banks charge fees for low account balances, so it's smart to close your account as soon you've confirmed all transactions have cleared.
- Follow the process to close your old account. The process differs with each institution—some may require a written request, while others may require you to close accounts in person.
There is a credit union available for everyone to join.
It's not hard to switch to a credit union, but it does take a little effort and research. Once you switch, you'll feel better knowing you are making a smarter choice with your money—and you'll likely see that manifested as more cash on hand. I intended to make the switch for a long time, and once I did, it was much more seamless than I thought.
Bottom line: It's easy to switch to a credit union. Just take the first step and do it!