Is It Time to Move Your Money?

Happy move your money day!

That's what thousands of people are calling this Saturday, Nov. 5, when they plan to transfer deposits from large national banks to local credit unions.

The "move your money" movement has been around for years, but lately it's really picked up steam as Wall Street has been put under the spotlight once again thanks to proposals for new fees, the ongoing foreclosure scandal, and the Occupy movement.

According to the Credit Union Association of America, 650,000 people have opened accounts at credit unions since Sept. 29, when Bank of America (NYSE: BAC  ) announced a new $5 monthly debit card fee. (In response to widespread public outrage, B of A, JPMorgan Chase (NYSE: JPM  ) , Wells Fargo (NYSE: WFC  ) , Regions Financial (NYSE: RF  ) , and SunTrust (NYSE: STI  ) have all backed down from charging their customers debit fees.) Over that time period, credit unions have received $4.5 billion in new deposits.

Credit unions are member-owned, not-for-profit financial institutions. They often provide more personal service, better rates on deposits, and cheaper loans.

What will happen this weekend? Who knows. But we could be looking at more than 100,000 additional people moving their money. Banxodus has already collected 52,000 "pledges" from bank customers to move their money (nearly half of which are customers of B of A). The website uses crowd-sourced research to help users locate "good-guy" banks and credit unions in their area. Another site, findacreditunion.com, offers to help users find a nearby credit union that "puts people first."

Of course, credit unions are excited about all these new members. But banks aren't exactly sweating the movement just yet. As my Foolish colleague Morgan Housel noted yesterday, deposits are at an all-time high -- $10 trillion.

The largest four banks are absolutely inundated with deposits:

Bank

Deposits

Cash on Hand

JPMorgan

$1,093 billion

$305 billion

Bank of America

$1,041 billion

$333 billion

Wells Fargo

$895 billion

$108 billion

Citigroup (NYSE: C  )

$851 billion

$29 billion

Source: S&P Capital IQ.

$1 trillion is really more than anyone can spend. Especially today, when banks don't see attractive lending opportunities, excess deposits just cost higher overhead and FDIC insurance fees. Bank of New York Mellon (NYSE: BK  ) actually started charging institutions a fee to accept their money, while US Bancorp (NYSE: USB  ) and JPMorgan charge small businesses a portion of their FDIC insurance premiums.

For this to really hurt the banks, you'd have to see customers leaving on an even larger scale, or big institutions joining in. A number of municipalities, many burned by banks in the past, others under pressure from their constituents, are considering divesting.

But "move your money" isn't just about getting back at the banks. I visited Occupy DC to talk to people who have moved their money or plan on doing so tomorrow. Many people just don't want to be associated with the national banks, feeling that Wall Street broke the law, blew up the economy, got bailed out, and then ripped off their customers. And they're voting with their feet.

Here's some of what they told me:

The huge banks are taking their customers' money with hidden charges. Why should I put my money with the kind of bank that will just lend it all to people who they know can't afford to pay it back? I don't want to be a part of that cycle of ripping us off little by little.

I don't want to give banks my money just so they can go speculating with it.

I used to work for Wells Fargo before being laid off during the same quarter it posted a 21% increase in quarterly profits to $3.4 billion. Banks make decisions on their behalf instead of ours. I want to invest in credit unions that are a part of our communities.

Since the repeal of Glass-Steagall, banks have the capacity to use federally insured deposits to engage in investment banking, market-making, and proprietary trading (once they poke 100 holes in the Volcker Rule).

Most of the commercial banks got bailed out. It's like buying a Chevy or a GM (NYSE: GM  ) car – I don't want to support a company that was reckless.

I don't want them to be too big to fail anymore.

What do you think? Please use the comments section below to let us know.

Ilan Moscovitz doesn't own shares of any company mentioned. You can find him on Twitter @TMFDada. The Motley Fool owns shares of JPMorgan Chase, Bank of America, Wells Fargo, and Citigroup. Motley Fool newsletter services have recommended buying shares of General Motors. 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.

Read/Post Comments (3) | Recommend This Article (5)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On November 04, 2011, at 4:59 PM, chipm wrote:

    I'd move my money away from the fraudsters, but I already did long ago. I hope tomorrow turns out to be a huge day!

  • Report this Comment On November 05, 2011, at 3:12 AM, gio1950 wrote:

    We moved out of Comerica soon after the

    Iraq war started, in favor of the credit union.

    I sent the old lady down to Comerica to get the

    advertised home equity rate reduction.She comes

    back with a higher rate, nearly double. That lasted 17 hours too long.

    Doesn't it seem strange that there aren't more

    comments? Homeless? (sorry). Kinda makes you wanna buy the FAS don't it.

  • Report this Comment On November 07, 2011, at 6:47 PM, ejclason2 wrote:

    I've never understood why more people don't bank with a Credit Union. I've been banking with Credit Unions for over 25 years. I've used Credit Unions for Checking and Savings accounts, Debit/ATM cards, Car loans, and my Mortgage. Never had a problem.

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