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Switching from a giant monster mega-bank to a credit union is easier than you think

Bank of America
With the news of many Giant Monster Mega-Banks increasing their fees, this is a good time to consider switching to a credit union for your primary "banking" needs. Internet-only banks are another option, but most people like to have at least one local brick-and-mortar financial institution. You may want to switch before you're hit with new or higher fees. Bank of America has recently provided this webpage to describe changes to its fees. Beware if you have a MyAccess Checking Account.

This Reuters blog post by Felix Salmon reviews a question received from one of his readers regarding the big banks and what consumers can do to level the playing field. Here's an excerpt of that question:
If customers were to take their deposits from the large banking institutions and place them in cooperative banks and small regional banks, this would have the same affect of leveling the playing field. What are your thoughts on this matter? Big banks offer pitiful interest on money that they lend and they charge exorbitant fees which contribute significantly to their profit, so it does not even make sense to do business with them (although I understand the advantages - more ATM's, theoretically more services, etc.)

Felix is pessimistic about the impact consumers can have, but he does recommend credit unions. However, he describes two issues with credit unions that make it difficult for consumers: 1) few credit union choices, and 2) too inaccessible and inconvenient.

Qualifying for Membership at Your Local Credit Union

I think the situation is better than what he describes. From my experience most people in the US can qualify to join several credit unions in their cities. In the past, most credit unions restricted membership based on employers. However, this has changed. Many credit unions now have community field of memberships in which you can be eligible if you live, work, worship or attend school in certain counties or parts of the counties. CUNA's database of credit unions makes it easy to find credit unions near where you live. This page also has a locator tool that takes into consideration not only your location, cut also your employer and other affiliations.

Qualifying for Membership at Nationwide Credit Unions

In addition to local credit unions, there are many credit unions that you can join without even residing close to any of their branches. Often you can qualify by joining an association which is open to all. Once you are a member of that association, you can join the credit union. The associations often have small yearly membership fees, but once you're a credit union member, you typically don't have to maintain the association membership to keep your credit union membership. This might seem a little unfair to the banks since credit unions receive tax breaks, but I'm more worried about the powers of the giant banks than this issue with the credit unions.

I list several of these "nationwide credit unions" in my weekly summaries. Many have a long history of offering very competitive rates.

Convenience and Accessibility

The other issue that concerns people about credit unions is the lack of convenience and accessibility. The mega-banks will often have branches on every block of your city. It's true that credit unions don't usually have that many branches. However, credit unions have developed a way to compete on this issue. Many are part of a CO-OP Network and a Shared Branching network. The CO-OP Network gives you access to many more ATMs and the Shared Branching network allows you to conduct basic banking transactions at any credit union in the network. The CO-OP Financial Services is an example of a surcharge-free ATM network and the CU Service Centers Network is an example of a Shared Branching network.

So we can do a lot today to reduce the powers of the giant monster mega-banks. It probably won't solve the too-big-to-fail issue, but it can help, and it can also help us save more money.
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marc | | Comment #1
Thanks for the heads up. I have kept my BofA account I opened in 1990 pretty much because I've had the account for so long that they don't put holds on my big checks, but it's rare I make those deposits. They have cool ATMs and great online banking, but smaller outfits do the job as well. I'm going to be quitting my job for a time and so will have no direct deposit so will most likely switch to a local bank or CU.
Anonymous | | Comment #2
Ken the Banking Guy--this is a totally excellent analysis.
cjdtech | | Comment #3
Might be a pain Marc, but if you close your current account, and open a new one online, you would avoid the monthly maintenance fee.

I've gone back to my CU too.
Anonymous | | Comment #4
I am confused about BOA's monthly fees. They had a big push recently that if you opened a MyAccess account online, no monthly charges were charged even without direct deposit. Are these accounts that were opened online also changing? If that is the case, that was criminal for BOA to do......
Anonymous | | Comment #5
I second the poster at 5:50AM today. I opened Myaccess checking online and was assured there would be no monthly service fee whatsoever. However, according to that website, I will have to start paying the $8.95/month fee. Isn't that illegal?
Sree | | Comment #6
I never bank with MMB except WaMu Free Checking account(just for its free Outgoing Wire Transfers).
I have been banking all the time with one good big credit union as my primary banker and plenty of other Credit Unions as and when there is a promotion offer with them.
So, I dont like the Mega Monsters to eat my pennies..
Oh!! BTW, I never had an issue of accessability as I use their wide shared ATMs and their co-op network branches.
Anonymous | | Comment #7
RE: BoA MyAccess checking monthly maintenance fees

Unless I'm mistaken, BoA's website did had a note about that said:

"^Exclusions to Monthly Maintenance Fee changes do not apply to customers who opened a free MyAccess Checking account during specific time periods at Bankofamerica.com: Customers in Customers in GA and TX after 11/1/2006; and customers in any state after 4/20/2007. "

So it looks like those who opened the MyAccess online will not have any fees.
Jumbo CD Investments
Jumbo CD Investments | | Comment #8
I, too, dislike Mega-Banks. The call centers tend to make you feel small. However, when I've had problems, more often than not, the local branch manager was more than willing to help.

I've had an account with Wells Fargo since I was 14. That is where my parents banked. Primarily for emotional reasons, I've kept it.

I recently opened up an HSA and went with my local credit union (although they are as large as many banks). They had less fees, but fees, none-the-less. I also required some special assistance, and they were more than willing to help.

Moral of the story, regardless of whether it is a bank or credit union, get to know the local people in charge.

Credit Unions themselves are getting squeezed with some recent NCUA take-overs of a couple of Corp CUs. Just know that you are in control. It is your money. Shop around if you have to.

ChrisCD :O)
Anonymous | | Comment #9
Re: Anonymous at 9:05AM
I thought if exclusions to the fee change APPLY to us, we would be fine... However, that sentence said the exclusion(i.e. exemption from the fee) does NOT apply to accounts opened after 4/20/07. If you opened MyAccess account online MORE than 2 years ago, you should be fine.
Anonymous | | Comment #10
It is confusing whether BofAm will start charging fees in June for accounts opened online that were advertised and have been fee-free. The footnote says that exclusions will not apply for recent accounts. Clarification on the new policy would be helpful.
Anonymous | | Comment #11
Log into your BoA MyAccess account and click on "Personal schedule of fees" and it will give you... YOUR PERSONAL SCHEDULE OF FEES, just like its name says!
Anonymous | | Comment #12
BoA is an awful, awful bank. Their disclosure of fees has conflicting information everywhere. I opened my MyAccess account online, so there are no fees. In fact, you can open one TODAY under those same terms. Yet the last statement I got says the fees ar changing to $8.95 /month from $5 per month. It also says "if you're not currently charged fees, you won't be". At the same time, in yet ANOTHER location on their website, it says I will. And then there's the "Personal schedule of fees" which says I am currently paying a fee (starting soon), and will pay an even larger amount starting in June. So which is it?
Anonymous | | Comment #13
"BoA is an awful, awful bank. Their disclosure of fees has conflicting information everywhere."

I totally agree with you. Their size feels less comforting than scary, like everything is verging on out-of-control. Worse still, their staff acts oblivious and don't care. I think a big part of their problem is excessive fragmentation and lack of integration.
Anonymous | | Comment #14
To 2:14 PM:

Absolutely correct. BofA needs to stop allowing people for whom English is not their first language to write such things. I considered the possibility they were purposely obfuscating the message, but then I dismissed that notion. They are simply not smart enough to **** up so badly on purpose.

I'm pleased to have clipped BofA for $600 back in 2007. I did the U of Iowa deal twice and opened the checking account. Not saying I'll be even after they steal my tax money, but I will be better off than I otherwise would have been absent the 2007 windfall.
Anonymous | | Comment #15
Concerning the MYACCESS checking new fees, the BOA website is still offering a zero fee MYACCESS checking if opened online. I can only assume that there is small print somewhere that states they can change fee structure at any time.
Anonymous | | Comment #16
I have had no luck with opening a credit
union cd .I live in NO. CALIF and there are a bunch of them here. but the hoops you must jump through have stopped me . tried 4 credit unions and at the last minute some thing came up that made it most difficult . I gave up even though most are paying more then the banks .
dont know why they make it so difficult
Anonymous | | Comment #17
Find the credit unions that have a community charter. Golden1 is a good example with branches in may parts of northern CA.

As with any financial institution, you fill out an application.

They do check you out with ChexSystems or a credit agency to make sure you are well behaved, but so will any place you open an account.
Anonymous | | Comment #18
Be careful with BofA. I opened an online MyAccess checking a couple of years ago and the Web site said there would be no fees at all. However after 1 year I noticed a $25 charge on the account. When I called the rep they said the online checking was free for one year and after that I had to either maintain balance or to have a direct deposit to avoid service fee. I got the fee reimbursed and closed the account the same day. Now I'm happy with Fidelity mySmart Cash checking (no fees at all for anything, they even automatically reimburse for other bank ATM fees) and with my Patelco CU checking (no hold for checks up to 5000). No more big banks!
Anonymous | | Comment #19
Just called BoA and the CSR said that my account usually has a $5.95monthly maintenence fee, which will go up to $8.95 per month in June.

But then she noticed that I had opened the account online, and assured me because of that fact my account has a permanent monthly maintenence fee waiver.

We'll see come June if this is indeed true...

And next year, we'll see again...
Anonymous | | Comment #20
I don't dislike the banks but I'm a CREDIT UNION guy and have been forever!. There is NO reason to belong to a BANK! For every reason I can give you two reasons to belong to a CU. I can go on and on with that said...Join a CREDIT UNION and stop being silly!
Anonymous | | Comment #21
I just had a live chat with BofA about the $8.95 monthly fee. Here is what the customer service representative said:

April 26, 2009 @11:19AM PST

Welcome to an online chat session at Bank of America. Please hold while we connect you to the next available Bank of America Account Specialist. Your chat may be monitored and recorded for quality purposes. Thank you for your patience.

You are now chatting with John. Welcome to Bank of America. How can I help you complete your online checking or savings application today?

John: Happy Sunday! My name is John. I'll be happy to help you select the best checking, savings, credit card or CD account to fit your banking needs. May I ask what type of account you are interested in opening today?

You: I understand that BofA will be starting a $8.95 monthly fee to MyAccess checking accounts. I just opened an account with a bonus for being a BofA credit card holder and the application process indicated no monthly fee and no minimum balance required. Will this new fee apply to my account?

John: Thank you for being a valued customer! No, when the MyAccess Checking Account is opened online, the account's maintenance fee and balance requirement are waived for the life of the account.

John: The maintenance fee would only apply if the new account is opened inside the banking center, and the account does not have either direct deposit of a minimum balance requirement of $1500.

You: OK, thank you for the clarification.

John: You are very welcome. Was there anything else I could help you with today?

You: No, thank you very much.

John: It’s definitely been my pleasure assisting you today. I hope you have a great day.

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