What We Learned From Bank Transfer Day

Amid the hype and hoopla, the protest marches, and the bank occupations, it seems something interesting happened on Bank Transfer Day: People actually moved their money. The Credit Union National Association, or CUNA, which has been thrust into the unexpected position of suddenly being the cool kid at the party, reported that nearly 700,000 people have become members in the weeks leading up to the event, with 40,000 alone joining a local credit union Saturday. Credit unions recorded $80 million in new savings and made $90 million in new loans to new and existing customers.

Now that we can claim Bank Transfer Day a success, let's take a look at what we learned.

You can opt out of the big bank system
The beauty of Bank Transfer Day was that it was inherently Foolish. Much like we Fools advocate for understanding and building your own portfolio, Bank Transfer Day advocated for understanding and building your own banking. It empowered regular people to take an active role in managing the bigger picture of their money. It was led by the notion that people without million-dollar portfolios could still determine how and by whom their money is being used.

You can do it without living outside in a tent
Bank Transfer Day worked because it appealed to the many people who are not able, interested, or willing to take part in a camp-out protest. While Occupy Wall Street protesters took part in many of the activities on Nov. 5, organizing marches and rallies in several cities, those activities were ancillary. The organizer of Bank Transfer Day made it clear this was a separate movement. Holding banks accountable, while important, was not the primary motivation. Whereas Occupy Wall Street is attempting to reason with a crazy person (large banks), Bank Transfer Day simply ended the conversation.

Opting out of the big bank system may not affect it much (and that's OK)
As I noted on Monday, individual accounts with moderately low balances -- the type that would have been hit hardest under many of the proposed fees -- don't typically generate much revenue for larger banks. CUNA estimates that credit union members save $6.3 billion each year just by doing business with a credit union, an average of just under $70 per member. That won't hit Bank of America (NYS: BAC) too hard -- and in fact, big banks may be just as happy to see those accounts go. But for many of the people who switched to a credit union, the satisfaction that comes with that extra $70 a year may be priceless.

It's not over
The proposed fees that prompted Bank Transfer Day have mostly vanished. B of A has rescinded the $5 monthly debit card fee that prompted the most vitriol, and the other banks fell in line like dominoes. JPMorgan Chase (NYS: JPM) , Wells Fargo (NYS: WFC) , Regions Financial (NYS: RF) , and SunTrust (NYS: STI) have all backed away slowly from recently announced fees and pilot fee programs. But that doesn't mean other fees aren't coming. Other banks, including BB&T and Fifth Third, are looking for additional ways to generate revenue.

Fool reader Travis Tredwell works for a local credit union and shared some advice it gives prospective customers: You should remember that allowing a financial institution to hold your money is a privilege, one that you can take away.

Want to see how these companies will fare in the coming quarters? Add these companies to My Watchlist.

Did you switch to a credit union? Tell me about it below.

At the time this article was published Molly McCluskey is a big fan of living outside in a tent and has done so on numerous occasions. She does not own shares of any of the companies mentioned. The Motley Fool owns shares of Bank of America, Wells Fargo, and JPMorgan Chase. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Richie

$80 Million dollars? Across the entire country? And you call this a success? Bank deposits are increasing by billions ..and you think $80 Million is a huge success? And "holding people's money is a privilege" ?? It is also a service ..if it wasn't then why don't you go into 7-eleven or Starbucks, give them your paycheck, ask them to cash it for you, hold it until you need it , keep it safe, track it for you, provide you with a detailed record of everythign that has happened to your money during the month, keep track of th balance for me oh and by the way ... make sure it is available anytime I would like it no matter where I happen to be --and if necessary transfer the money to wherever I spend it. The only difference between the building where you give your money to someone you don't know and the building where you don't is the word "bank" -- so clearly there is a service you would not trust to others being provided to you by a bank -- yes it is a privilege to have customers for any business...but it is a service to hold their money for them.. as much as any other service for which people pay a fee.
Oh..and let's not forget Occupy Oakland opened their account with Wells Fargo.... guess they figured out ...there is value to having a big bank hold your money ...
Lastly, the other big banks did not "fall in line like dominoes" because BofA stopped charging the debit card fee-- BofA was the LAST bank to rescind the fee --check your facts before misleading readers.

November 10 2011 at 6:21 PM Report abuse rate up rate down Reply
das4413

TRANSFER THIS

November 10 2011 at 4:33 PM Report abuse rate up rate down Reply
jmrrand

When ATM's were first introduced it was said they would reduce bank overhead and in so doing their would be no cost to the consumer. Well we know what happened. Once the greedy banks get their hooks on you they start to gouge. Its not enough that they make obscene profits and pay unconscionable salaries to their "elite" personal but they get bailed out by the common folks and than pay bonuses to those who got them into trouble in the first place.

I think its only proper that the officers and boards shoulder some of the cost of these mishaps. When times are good they make money and when times are bad they still make money> Sweet job.

November 10 2011 at 12:30 PM Report abuse -2 rate up rate down Reply