Exodus of Big Bank Customers Benefits Credit Unions

blr-editor | November 7, 2011 | Comments (0)

Outraged bank customers in Seattle close their Chase accounts

Last week, Bank of America learned a lesson in humility. After confidently announcing their $60/year debit card fee several weeks back, they ultimately backed down last week.

However, what exhortations and advertising by small banks and credit unions could not do in decades of struggling against the big banks, Bank of America did with its failed announcement.

“Bank Transfer Day” happened on November 5th – Saturday – with a huge Facebook campaign urging customers to ditch the big banks and move to smaller banks and credit unions.

The day received a big push from the Bank of America gambit and now a new report from Market Rates Insight (MRI) reveals that credit unions increased their membership by more than 725,000 from April 2010 through the end of March 2011.

Revulsion to the big banks’ incessant nickel and dime fees, extortionate interest rates on credit cards and perceived unfair treatment by consumers has led to an exodus of large numbers of customers from the large banks.

The Huffington Post added:

At least 650,000 customers opened new accounts at credit unions since September 29, the day Bank of America announced it would charge customers a $5 per month fee to use their debit card for purchases starting in 2012, the Credit Union National Association estimates. If that number holds true, it would be more than the 600,000 consumers that joined credit unions in all of 2010.

More than 80 percent of the credit unions that experienced a boost last month attributed the growth to fees like Bank of America’s or a mix of reactions to fees and “Bank Transfer Day” — a social media-centered movement encouraging consumers to transfer their money from banks to credit unions or other non-traditional lenders, according to CUNA.

It is expected that the next quarter reporting from the big banks will show the effect of the mini exodus from the big banks. Are you one of the fleeing customers? Did you observe Bank Transfer Day?