November Financial Fitness Challenge--Find a Friendly Financial Home
A year or so ago it was Move Your Money that encouraged consumers to "break up" with their big banks and move to a local alternative like a credit union. This year, Bank Transfer Day, Nov. 5, fosters the same idea: If you're not happy with your big bank, switch to a more consumer-friendly alternative.
And many consumers would love to do just that—if it wasn't such a hassle.
You're already a credit union member? Good for you. But if you aren't, and concern about the work and time it would take you to switch is the only thing holding you back, you could be closer to making a move than you think.
It turns out that breaking up isn't all that hard to do.
And some barriers you might worry about—such as the bank-fostered claim that credit unions don't have enough ATMs, for example—don't hold up. In fact, most credit unions belong to a national ATM network that makes it possible for you to use any of thousands of machines, and without paying a fee to do so.
Almost all credit union members—98%—have access to an ATM or debit card through their credit union; 96% have access to an ATM via their credit union. And 97% of members have access to online banking.
Maybe you think a credit union doesn't have enough branches to be convenient for you. Be reassured on that score, too. Many credit unions participate in a "shared branch" network that allows members of one credit union to conduct transactions at many other participating credit unions, close to home and nationally.
Shared branching is only one cool service that demonstrates just how different credit unions are from banks. Can you imagine a bank allowing its customers, even encouraging them, to do business at another bank? Pulleeeze.
One step at a time
If you decide you want to move your money, take a look at your finances and your records. This is a good opportunity to make sure those are in good shape; you'll need to be organized to ease the big switch. The folks at your credit union can help make this transition a smooth one, and may even have a switch kit you can use.
Or you can follow this seven-step checklist adapted from Consumer Reports.
Step 1: Open your new account with a small deposit.
Step 2: List all of the automatic payments and deposits set up to go in and out of your old account each month, and on what dates.
On average, credit union members save about $70 a year, and families save more than $130 compared with nonmembers.
Step 3: If you have direct deposit, ask your employer to switch your paychecks to your new account. If you don't already use direct deposit, this is a great time to set that up, too. Find out what date the first deposit will occur.
Step 4: When you know the date of your first deposit, reschedule each automatic payment or debit to come out of your new account.
Step 5: Leave a small amount of money in your old checking account for at least one more month.
Step 6: Once you're sure all automatic payments and all direct deposits are coming and going from your new account, transfer the final funds from your old account into the new account.
Step 7: After the transfer clears in your new account, close the account at your old financial institution and get written confirmation that your account is closed.
If you live paycheck to paycheck, as many of us do, consider transferring some money from savings to your old checking account until all the outstanding transactions clear. That will give you peace of mind that you won't incur any overdraft charges until the transfer is complete. You might have to stay above a minimum balance to avoid fees in the old account, too. When you no longer need that cushion, move the money into the new savings account at your credit union.
I consolidated all my accounts with one credit union a few years ago and dreaded setting up online bill payments all over again. It turned out to be simple and not time-consuming. I just set up the biggies first—mortgage, utilities, cable, credit card payments, and car payment—and then filled in the others as the months rolled along. I ended up purging a lot of accounts that I'd set up and never deleted once their original purpose passed, so that's another benefit of making a switch.
Go all in
If you're already a credit union member, think about ways you could be garnering even more membership benefits. On average, credit union members save about $70 a year, and families save more than $130 compared with nonmembers. The more you use your credit union, the more you will save. And not coincidentally, the stronger your credit union will become.
Is your mortgage held by another lender? If the interest rate isn't as good as what's available now, and you qualify, think about refinancing at your credit union.
Bank Transfer Day has made a big splash, but you can move your accounts any day it makes sense—for you—to do so.
How about your car loan or credit card? The national average for a credit union car loan is one and a half percentage points better than at a bank, and two to two and a half percentage points better for a credit union credit card than for a bank card.
Bank Transfer Day has made a big splash, but something as serious as choosing your financial institution deserves more than a single day's attention. You can move your accounts any day it makes sense—for you—to do so.
When you're ready, if you're not already a credit union member, check out ASmarterChoice.org to find a credit union you may be eligible to join.
Financial Fitness Challenge
The people at your credit union are serious about helping you achieve and maintain financial health. They bring you this website and other tools to help you make the most of your financial resources. The Financial Fitness Challenge continues to look at ways you can make better financial habits no matter what condition the economy is in.
Each month we randomly select five winners to receive $50 Visa gift cards; we choose each month's winners only from that month's entries, so enter often. Remember to register for the Financial Fitness Challenge.
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