A grassroots movement that came to life last month is urging bank customers to close their accounts in favor of credit unions Saturday, but experts say the money-moving isn't likely to make a significant dent in larger banks' bottom line.
The spirit behind "Bank Transfer Day" caught fire with the Occupy Wall Street protests around the country and had more than 77,000 supporters on its Facebook page Friday. The movement has already helped beat back Bank of America's plan to start charging a $5 debit card fee.
It's not clear to what extent the banking industry's about-face on debit card fees will extinguish the anger driving the movement. But many supporters say their actions are about far more than any single complaint.
"It's too little, too late," said Kristen Christian, the 27-year-old Los Angeles small business owner who started "Bank Transfer Day." She already opened accounts at two credit unions in preparation for cutting ties with Bank of America this weekend.
"Consumers are waking up and seeing that they have options," she said.
Chris Farrell, an economics editor for Marketplace Money, told KPCC's Larry Mantle Oct. 26 that money credit unions gain from the transfer day will likely go to a good place. "I would expect a lot of it will go back to the members, to the community, but most of it on the consumer side," he said.
Still he warned, not all credit unions are created equal. "Credit unions are member owned, they're not stockholder owned," he said, "that's one of the reasons why they can provide services at a cheaper cost — but not all credit unions are alike. You just can't assume 'Oh, this is a credit union, they're not going to charge me a hefty fee.' That's not going to be the case. So you still have to shop around."
Even with its public support, however, it's not likely that any account closings that take place on Saturday will make a big dent with industry titans such as Chase, which is the largest bank in the country with some 26.5 million checking accounts.
Farrell says banks are most likely betting on their networks to keep them afloat, "They're sort of saying 'we've got this web of relationships, it's not as easy to transfer as many people think it's going to be.'"
"What I think the mistake here is, there’s actually some technological developments that are going to make it easier to transfer funds," he said.
Still, the call to action shows just how incensed consumers were at the prospect of a debit card fee at a time of so much economic uncertainty. Even those who were appeased by the industry's reversal may have tapped into a new sense of empowerment.
That's the case for Dan Blakemore, a Bank of America customer for the past 10 years. He said he no longer plans to close his checking account now that the debit fee has been scrapped. But he'll be on the lookout for any other changes that might hit his wallet.
"I'm pretty confident they're going to find some way to get that extra money," said Blakemore, a 28-year-old who works for a nonprofit fundraiser in New York City. "I'll just have to see if it offends my sensibility enough to close the account."
Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co. and Wells Fargo & Co. are keeping mum on whether they've seen an uptick in account closures in recent weeks. But credit unions and small community banks have been basking in the spotlight and issuing press releases highlighting what they say are superior interest rates and more intimate service, along with tips on how consumers can transfer accounts. They haven't been shy about the surge in new business they're enjoying either.
Navy Federal Credit Union, the largest credit union in the country, says new account openings in September and October were up 38 percent from a year ago. National Capital Bank, a two-branch community bank in Washington, D.C., says the vast majority of its new account openings in recent weeks have been by fed up Bank of America customers.
"The debit fee was definitely a driver," said Noah Wilcox, president of Grand Rapids State Bank in Minnesota, which is also enjoying a lift in account openings.
Because credit unions and community banks vary so greatly in size, however, it's hard to gauge the total scope of the defections they're reporting. For example, the Lower East Side People's Federal Credit Union in New York City says it's enjoying more than 55 new account openings a week. That's a big jump from its average of about 10 new accounts per week, but insignificant when weighed against the portfolios of the nation's largest banks.
Big banks have also learned that customer grumblings don't always translate into action. That's particularly true for those who have multiple accounts, direct deposit and automatic bill pay; many decide that switching just isn't worth the hassle.
"People will do a lot of complaining before they actually uproot and move," notes Mark Schwanhausser, a banking analyst with Javelin Strategy & Research.
The recent firestorm over debit card fees was "in a class of its own" because customers saw it as a charge for accessing their own money, he said.
The timing of Bank of America's fee announcement was unfortunate on multiple levels as well. In addition to the anxiety many are feeling amid high unemployment and stagnant wages, the news broke just as the Occupy Wall Street protests were capturing the national spotlight.
And big banks have been a key target for Occupy Wall Street, which has tapped into the lingering resentment many harbor over the role of banks in the financial meltdown of 2008.
Last month, two dozen Occupy Wall Street protestors were arrested when they entered a Citibank branch in New York City and refused to leave. Protestors have also banged drums and demonstrated outside bank branches in other cities; PNC Bank twice closed branches in downtown Pittsburgh last week after protestors entered.
But those are the extremes. Schwanhausser of Javelin said many customers will likely be placated by the industry's white flag on debit card fees.
"People are people going to look at that Nov. 5 date and say 'We made our point'," Schwanhausser said
The banking industry may feel the same way; representatives for Bank of America, Chase, Citi and Wells Fargo indicate they haven't done anything to prepare branch employees for a surge in account closings this weekend. Then again, many of the closures may have already taken place.
Molly Katchpole, a 22-year-old nanny in Washington, D.C., who started an online petition urging Bank of America to drop its debit card fee, says the bank's about-face won't win her back.
"The damage is done," said Katchpole, who has since joined a credit union in Washington, D.C.