The Impact of Bank Transfer Day
Even though the major banks canceled their debit card fees, many consumers switched to credit unions in October and early November. Two credit union trade associations, Credit Union National Association (CUNA) and National Association of Federal Credit Unions (NAFCU), surveyed their members to determine the impact of the debt card fees and Bank Transfer Day. The outcome was substantial increases in new accounts at credit unions. Credit union membership is not as small as you may think; there are approximately 93 million credit union members in the U.S.
Credit Union National Association (CUNA) sent a survey to 1,100 credit union members to determine the impact of Bank Transfer day, November 5. It is a trade association for credit unions which includes about 90 percent of the nation’s credit unions.
On Bank Transfer Day, more than 40,000 new accounts were opened at credit unions that were members of this association, which totaled $80 million in new savings accounts. Approximately 60 percent of the credit unions that signed up new members that day also made loans totaling $90 million.
From September 29 to November 4, new credit union members averaged 20,000 per day, which doubled on Bank Transfer Day. Approximately 650,000 joined credit unions during that time, which is more than the total for all of 2010! (NOTE: The 650,000 number was recently revised downward by CUNA)
The National Association of Federal Credit Unions, a trade association for federal credit unions, also conducted a survey of their members. These credit unions also had substantial new account growth in October. The top reasons consumers switched from banks to credit unions were: their dissatisfaction with banks (50.8 percent), the increase in debit fees (23.8 percent) and poor customer service (11.1 percent).
54 percent of the credit unions that responded to the survey reported an increase in share growth. Of this group, 64 percent had growth in membership in October 2011.
41.7 percent had an increase in share growth in of greater than 20 percent compared to the prior month (September 2011).
21.7 percent had an increase in share growth of greater than 20 percent compared to the prior year (October 2010).
Banks Raising Fees
The major banks canceled debit card fees before Bank Transfer Day, because of consumer and politician backlash and account cancellations. Banks are determining other ways to increase revenue and some have already increased fees for other services. Here is a list of some of the ways banks are going to increase their revenue by charging customers for other services:
Increase entry level checking account fees.
Lower the interest rates paid on savings accounts.
Raise minimum account balances on checking accounts.
Increase fees for cash withdrawals at ATMs.
Increase fees for wire transfer.
Increase fees for paper statements.
If your fees go up or are charged new fees, consider changing banks. In previous blogs, I have recommended looking at credit unions instead of banks. I also suggested switching from your bank, if you are being charged too much. At least 650,000 people made the switch during October and early November. If banks keep raising rates, more may switch. Credit unions are no longer the best kept secret.
Credit Damage Expert, John Ulzheimer, is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, and a Contributor for the National Foundation for Credit Counseling. He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry. Follow him on Twitter here.