Customers winning in revolt against banks' debit card fees (video)
Consumers have scored a victory in the battle over debit card fees. Now they are being courted with cash bonuses and other offers by credit unions and smaller banks eager to capitalize on anti-big bank sentiment.
Utah's second-largest credit union, Mountain America, is offering $125 to customers who open a checking account. The credit union also is extending its lobby hours at select branches this Saturday to address an activist movement called Bank Transfer Day, which for weeks has urged customers to close their accounts at big banks and switch to credit unions or smaller banks by Nov. 5.
Bank Transfer Day is the creation of a small-business owner in California who was angered by Bank of America's now-scrapped plan to charge a $5-per-month fee to debit card users.
To get the $125 cash bonus at Mountain America, consumers must open a checking account with direct deposit and opt to receive their statements electronically. For more information, go to http://www.macu.com/switch.
The bank said 18 Utah locations will be open from 9 a.m. to 2 p.m. Saturday to help customers with new accounts.
Credit unions, which have traditionally marketed themselves as lower-cost alternatives to large banks, have stepped up efforts to tout depth of their services, as well. Many are aggressively marketing mortgages, student loans and business accounts.
America First is touting a "painless" three-step switch kit for those interested in changing financial institutions and has created a toll-free hotline, 1-866-218-1572.
Goldenwest Credit Union is touting free checking "with no strings attached." The credit union is offering no monthly fee or minimum-balance requirement and a free box of checks.
Credit unions are nonprofit, member-owned organizations that have certain requirements for membership. Deposits in credit unions are federally insured up to certain limits, just as they are with banks.
Consumers, however, should do some research before moving accounts, said Howard Headlee, president of the Utah Bankers Association.
"Smart shoppers will see that no bank in Utah is charging a debit card fee, and based strictly on value, they should be moving their money from credit unions into banks," Headlee said. "The quality and cost of bank products is equal to or better than credit unions, despite the fact that banks are paying millions in school taxes that the credit unions completely avoid. "
From a purely cost standpoint, many credit unions charge less in various fees compared with big banks. Salt Lake City graphic artist Steve Jerman, 49, said he is paying markedly less in fees since switching his business account to America First from Wells Fargo, where he had an account since 1990.
"Right off the top there was $10 to $15 per month [in fees] that just went away," he said. In the year since the switch, Jerman said he is happy with the decision.
Big banks and smaller ones are fighting to retain customers and attract new ones. Nearly every big bank has backed off plans to charge a debit card fee. And KeyBank, for example, is offering a $200 bonus to consumers who open a checking account online by Friday. For details, go to bit.ly/vABZfG. The bank also is offering a $150 bonus to people who open an account at the bank's branches at 36 S. State Street, 1500 S. Foothill Drive or 1098 S. 300 West. Mention code DMD1011A.
Banks also are trying to demonstrate that their fees are competitive. Utah-based Zions Bank took out half-page newspaper ads in Salt Lake City last week announcing that it does not charge for debit card use. "We take your trust very seriously," the ad said. "Which explains why we make sure our banking relationships are fair including our fees.
"If you are thinking of switching your banking relationship, we offer you a true community bank alternative with all the services you might expect from a national bank."
Scott Simpson, chief executive officer for the Utah Credit Union Association in Salt Lake City, said he hasn't seen anything in his career quite like the revolutionary rebellion that is Bank Transfer Day.
"Activists are out there telling people to open accounts at credit unions," he said. "It's fantastic."
Thinking of making a switch?
Give notice • Let your bank know you are planning to leave. Depending on how long you have been a customer, how many of the bank's products you are using and the balances in your accounts, your bank may be willing to waive a fee or make some other concession to keep you as a customer, said Gail Cunningham, a spokeswoman for the National Foundation for Credit Counseling. "No one wants to lose a valuable customer, so be sure to talk before you walk."
Compare costs • "Smart consumers compare all of their options," Cunningham said. Know the fees that matter most to you (and those you pay the most often) and see which financial institution offers the lowest costs. For example, someone who uses ATMs frequently may compare fees a bit differently than someone who writes a lot of checks.
Compare rates • Fees are one side of the equation. You will also need to compare what rates you are earning on your account balances and what rates you are paying on your credit cards.
Know what's important to you • Do you do most of your banking online, or do you like going into a branch where everyone knows your name? Fees aside, you may want to do business with a financial institution that fits well with your lifestyle.