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With the recent news that many banks are going to start charging from debit card use, I was thinking of switching to a credit union or local community bank because I heard they would most likely not do such a thing. What are the pros and cons?

  • Another option is online banking. I use an online bank and because they have no overhead from maintaining an actual bank, there are no fees and i can use anyone's ATM and they will reimburse the fees that those banks charge. I recently opened a savings account at Ally bank, but they do have checking. It's actually a pretty good bank. There have been very few times where i actually needed a physical bank after switching, but there are ways around that. – Matt Oct 1 '11 at 12:10
  • See also money.stackexchange.com/questions/823 – Ash Machine Mar 30 '12 at 21:12
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Banks, the big ones, have shareholders and the board to answer to. Credit Unions have members and the board to answer to. You become a member by joining a CU.

Banks' prime objective is profit maximization, a credit union's prime objective is members' welfare.

Personal experience: I didn't mind that the banks charge fees, what was frustrating was keeping up with the policy changes. Have X amount to avoid Y fees. Once you fulfill that, do something else to avoid some other fees. You miss one notice and you'll pay dearly! This constant jumping of hoops was enough to switch.

Not saying CUs don't change rules, but in my opinion, not as frequently as big banks.

On fee, for instance, my overdraft with my CU is $5. With BofA it was something like $35 before regulations put a cap on such ridiculous fees.

  • Do you get to vote on who is on your credit union's board, or directly vote on rules? In what way do you ensure the credit union "answers to" its members? – sdrawkcabdear Sep 24 '16 at 0:31
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Don't switch just because you hear people panicking on the talk shows. Banks are competitive business and won't start charging for using debit cards too fast.

If and when they decide to do such a thing after all - then start shopping and see who doesn't catch up with the fees and still provides the services you want for the price you're willing to pay.

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    But also don't wait until they start charging you fees. Competition is already ongoing. Switching a bank is easier than you think. – MrChrister Oct 1 '11 at 0:16
  • Yeah, but CU is not a silver bullet solving all the problems. They have fees, and the one I'm entitled for from my work is actually more expensive than Chase. – littleadv Oct 1 '11 at 0:26
  • Actually several banks like Wells and BoA have already announced they plan to begin charging for debit cards or raising what they already charge. Dont get me wrong, I am sure that if they could have justified doing so because the wind blew they would have this is just a convient excuse to raise fees. – user4127 Oct 5 '11 at 15:36
  • @Chad - yeah, I got the memo: t.co/oWMzbmcF – littleadv Oct 5 '11 at 17:51
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Fees mostly. BOA, for example, just announced $5/month for for all debit cards. Chase has foreign transaction fees, mostly hidden. BOA once famously raised interest rates on credit card holders to 28%, legally. Also, some people do not like patronizing a bank with CEOs that bankrupt the company and then get multi-million dollar golden parachutes. Finally some people have a problem with banks or institutions that suspend accounts based on political or unproven legal proceedings (ala Wikileaks and BOA). Credit unions are less like to be involved in this sort of activity since they are not privately traded, and as such they are not ruled by shareholders who demand bottom line results at all costs.

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