Hundreds of thousands of Americans cashed out this weekend, transferring their funds from big banks to credit unions and small community banks, as part of a backlash movement called, "Bank Transfer Day."
The move, designed to send big banks a wake-up call, was sparked when consumers caught wind of plans by Bank of America and other big banks to start charging fees for debit card use.
California resident Kristen Christian was so angered by the news, she started the online movement to transfer money out of big banks.
"It seemed unfair to me that a large corporation would target a group of people they viewed as weak or complacent," Christian said.
Although BofA cancelled the $5 debit card fee, some customers said it was too little, too late.
"I've always had a problem with paying a bank to keep my money," small business owner Robert Walker told WBTV, in Charlotte, N.C.
An approximate total of $4.5 billion was withdrawn from banks across the country Saturday, most of it going to local non-profit credit unions.
By Nov. 3, credit unions saw 650,000 new accounts. They project that number will reach a million.
Pros and Cons
Experts note that both credit unions and major banks come with advantages and disadvantages.
According to a 2010 Bankrate.com study, the benefits of banking with a credit union include:
- Free Checking
- Lower overdraft fees
- Lower ATM fees
- Interest rates capped at 18 percent
"Credit unions very often beat their banking counterparts in terms of offering lower rates on loans and higher rates on deposits," Bankrate.com Senior Financial Analyst Greg McBride told the Wall Street Journal.
"For a consumer who's shopping around for the best deal, that has to include looking at credit unions," he added.
However, Bankrate.com notes that large banks beat out smaller institutions when it comes to matters of convenience. For instance, large banks offer:
- More ATMs
- Longer service hours
- Online and mobile banking
- 24-hour call centers
Still, large banks have no caps on credit rates or loan fees.
McBride said that in the final analysis, it was important for customers to shop around as there's no "one size fits all."