Occupy Wall Street activists and their allies have been touting Saturday as "Bank Transfer Day." Credit unions say they're already seeing results, thanks to the firestorm over Bank of America's $5 debit-card fee: Since Sept. 29, when BofA announced plans for the new fee - since reversed - credit unions have gained an estimated 650,000 members and $4.5 billion in new deposits.
The Credit Union National Association announced its estimates today - crowed about them, really - in a news release based on a survey of about 5,000 member institutions. It says the growth in membership dwarfs the 80,000 new customers gained in an ordinary month.
"When we did the number crunching and came up with that number, we kind of sat back and said 'Wow,'" said CUNA spokesman Patrick Keefe. He said "the vast majority" of credit unions attributed the extraordinary growth "to new bank fees and/or Bank Transfer Day."
As I explained here, Bank of America announced the new fee in reaction to expected revenue losses as a result of the so-called Durbin Amendment, which limited big banks' cut of every one of their customers' debit-card purchases to an amount "reasonable and proportional" to the banks' actual costs. Before Oct. 1, big banks were collecting about 44 cents on the average $38 purchase. Now, thanks to new Federal Reserve rules, they're limited by a formula that brings in about 24 cents.
Bank of America said the new rules could cost it as much as $2 billion a year. As a group, the big banks are expected to lose $6 billion to $8 billion in annual fees.
But Bank of America appears to have miscalculated in believing it could simply grab another debit-card revenue stream to replace its losses. (Having watched BoA get burned, other banks are being a little more stealthy - or at least more PR-minded.)
But the firestorm had been set. Inadvertently, Bank of America drew attention to a problem that consumer advocates and others have long complained about: the difficulty consumers face in understanding what they actually pay for their banks' services, especially when much of the revenue has been coming indirectly via ever-rising debit fees collected from merchants. Earlier today, two Democratic senators joined the Pew Health Group in calling for a simplified, one-page disclosure form for key checking-account terms.
Meanwhile, the credit unions and organizations such as the Progressive Change Campaign Committee are crowing about the credit unions' big October numbers and urging more customers to vote with their feet and money.
The credit-union association said:
"These results indicate that consumers are clearly making a smarter choice by moving to credit unions where, on average, they will save about $70 a year in fewer or no fees, lower rates on loans and higher return on savings." said Bill Cheney, president and CEO of CUNA, the Washington, D.C.-based advocacy group.
He added that studies have shown people living paycheck to paycheck save even more at a credit union than the average financial institution customer, as they use more credit union services.
Cheney said the growth is particularly noticeable at larger credit unions (those with $100 million or more in assets, which account for about 20 percent of all credit unions – but count about 80 percent of all credit union members). The CUNA survey shows that more than 70 percent of these credit unions reported they have seen growth in memberships and deposits since Sept. 29.
The Progressive Change Campaign Committee introduced a new online tool today, dubbed Banxodus, to help consumers find "good-guy banks." It says:
By moving our money, consumers are making sure that the Wall Street banks that tanked our economy are less "too big to fail." Today, with the launch of Banxodus.org, we are empowering hundreds of thousands of others to take action by finding and moving their money to a good-guy bank near them.
I can't vouch for Banxodus' algorithm, of course. Another drawback is that to see its results, the site asks for your name and email address and asks you to "Take the pledge: 'I'm moving to a better bank.'"
But I did discover that its search engine isn't too persnickety - it accepts almost anything in the proper form. And among the "good guys" I found on a Philadelphia-area search, in addition to a long list of credit unions, was at least one relatively big institution: Citizens Bank, an institution that plays a big civic role in Philadelphia - Go Phillies! - but also has drawn repeated criticism over its overdraft fees. Oddly, Banxodus didn't seem to include one local institution, Valley Green Bank, which I wrote about here because it eschews most fees and reimburses four to six withdrawals a month at other banks' ATMs.
Neil Sroka of PCCC says the tool was developed quickly using "crowd sourcing."
"Over 6,000 people signed up to help us research local banks over the weekend and are currently busy crowd-sourcing info into our Banxodus tool now," he said via email. "This will continue after launch and will allow the tool to get even better as usage grows."
All I can say is: Stay tuned.
A reader wrote to complain about fee-structure changes announced recently by TruMark Financial Credit Union, one of the region's largest, that have upset customers.
"Their Facebook page is heating up with disgruntled customers threatening to find alternatives. I happen to be one of them...," he wrote.
It's tough to say how TruMark's fees stack up - the main point of yesterday's call by the Pew Health Group and Sens. Dick Durbin and Jack Reed for a new, simplified fee-disclosure form so that consumers can shop for the best deal.