01.CHOICE supports US consumers
What happened on Bank Transfer Date in the US?
Thousands of people protested across America on Saturday November 5th to mark the official Bank Transfer Day, a
consumer revolt against what has been characterised as the corporate power and greed of big banks. Their concerns have many parallels with Australian consumers when it comes to getting a better deal from the banks – concerns that have been addressed by CHOICE over the past year.
In what started as a single Facebook post by Kristen Christian, a 29 year old art gallery manager from California, the bank transfer movement gained momentum fast, with hundreds of thousands of American consumers moving their money away from big banks and into smaller credit unions and community banks in the last couple of months.
Why US consumers acted
Consumers had reason to take action. A number of big banks in the US, including Bank of America and Wells Fargo, sought to introduce a $3-5 monthly fee for debit card holders this year in response to the Federal Reserve capping the charge for a debit card transaction at 24 cents, despite this figure being up to three times more than it costs the bank to process the transaction.
Fed up with the corporate banking sector and increased fees (which have now been abandoned by both banks due to public pressure), Christian mobilised consumers using Facebook. To date, just shy of 60,000 people support the cause and 85,000 agreed to attend the event on November 5.
A survey by the Credit Union National Association (CUNA) in the US reported that 650,000 consumers joined credit unions in the four weeks to November 5th. CUNA estimates credit unions have added $4.5 billion in new savings accounts in this time. (Read CUNA's media release of 8 November 2011)
This boost in credit union popularity comes as a welcome movement within the financial sector in the US, whose five biggest banks currently control 40% of deposits and where the top six banks hold $9.5 trillion in assets, equal to 63% of the United States GDP.
CUNA President and CEO, Bill Cheney, said many credit unions made concerted efforts in the last month to highlight their accountability to new and existing members, including providing additional information about the structure of credit unions being member-run institutions. This reflects Christian’s push for consumers to be more aware about how the big banks earn their money and armed with enough information to make an informed switch.
CHOICE backs the move of our US sister organisation, Consumers Union, to defend the dollars of US citizens and support Christian’s cause. The Consumers Union provided practical financial advice over the weekend to consumers who were interested in making the switch.
The growing distaste among consumers in the US against unfair banking practices is in line with the CHOICE Ditch and Switch campaign, launched in December last year, which urged Australian consumers to move their money to banks that offered accounts with little or no fees, whether credits unions or other institutions.
Our investigation into the banking sector found banks made at least $7.3 billion over a 12-month period off the $153 billion consumers keep in low- or no-interest transaction accounts, not including the fees banks charge consumers for access to these funds.