4 Simple Steps for Taking Your Money Out of the Vampire Banks
By Lynn Parramore, AlterNet
Can’t pitch a tent at Zuccotti Park? Not to worry. There’s something meaningful you can do to stand up to vampire banks that bleed the economy — and your wallet. The feeling of satisfaction amply rewards the inconvenience.
I know. I decided to break up with my bank this week. The whole thing was an arranged marriage from the start. HSBC and I were joined because it gobbled up Marine Midland, the bank I actually signed up for in the late 90s. The truth is that my bank was taking advantage of my trust and abusing my loyalty. So I said sayonara.
Does my bank care? From a financial perspective, not really. (Although if enough municipalities, states and big pension funds move their money, that could start to hurt.) But breakups are bad for PR, and the symbolic action against the menace of Too Big to Fail is good for citizen morale.
Bank Transfer Day is the brainchild of Kristen Christian, a 27-year-old Los Angeles art-gallery owner who picked Nov. 5 as a hat tip to British folk hero Guy Fawkes. In 1605, Fawkes attempted to blow up the House of Lords and was captured and executed, but not before impressing King James with his “Roman resolution.” (When asked what he was doing with so much gunpowder, Fawkes memorably replied: “to blow you Scotch beggars back to your native mountains.”) If the 28,000 likes on the Bank Transfer Day Facebook page is any indication, Christian’s idea has sparked a wave of populist enthusiasm. We’re in a season of inspiration, and it feels good to stand up and be counted. By something other than your vampire bank’s actuary. Let’s get started.
1. Facing Reality
If your institution’s name is Bank of America, Wells Fargo, Citibank, or Chase, you may skip this step. Your bank is a Too Big to Fail behemoth that helped tank economy and used your tax dollars as a life preserver. It’s time to sail on.
Otherwise, do a little research. My own bank, HSBC, is a bit lower down in the list, but according to Forbes magazine, it’s the world’s second-largest banking and financial services group and second-largest public company — what William K. Black calls a “systemically dangerous institution” (SDI). In other words, a Too Big to Fail poster child.
HSBC is guilty of several crimes against humanity, including star billing in the subprime crisis and a penchant for fighting regulation that would make the banking industry safer.
Furthermore, HSBC is currently making mind-blowing profits (they doubled in 2010). Yet it has recently sent letters informing me of jacked up fees on ATM usage and line of credit accounts. Why? Could it be that HSBC is colluding with Bank of America, which recently announced open season on customers with its new debit card fee? Something sure smells rotten.
I therefore proclaim HSBC unworthy of our relationship. If you’re not sure about your bank, there’s a handy tool available to help you make an assessment. In partnership with the Move Your Money campaign kicked off in ’09 by Arianna Huffington, economist Rob Johnson, and filmmaker Eugene Jarecki, Chris Whalen’s firm Institutional Risk Analytics offers a proprietary system that grades banks using FDIC data. Simply enter your zip code and you will find a list of high quality banks in your area. If your bank is not on that list, take a long, hard look. Small doesn’t necessarily mean better, which is why Whalen’s tool only lists banks which are financially sound and FDIC insured, no matter what the size.
And consider the financial advantages of escaping the clutches of monster megabanks. Smaller banks and credit unions usually give you better deals on credit cards, for example, because their business models have not relied on penalty fees and the shady practices that go along with them. They also offer superior rates on loans and other services.
3. Planning Your Exit
You’ll want to keep your current checking account open for a little while in order for any outstanding checks to clear and to allow time for a new account to be set up. But you can go ahead and close down your savings account. It took me exactly ten minutes to do that at HSBC and put a stop on the automatic monthly transfer from my checking to my savings account. You can get your money in cash or just transfer everything over to your checking account.
I had a fantasy of going all 99 percent on the folks at HSBC, but the only people at my branch were two friendly women behind the counter and a couple of tellers. When asked why I was closing my savings account, I politely mentioned the new fees and noted the rather low (practically non-existent) interest rates. They just smiled and assisted me. It was that simple.
The next step was to open a checking and savings account at Amalgamated. If you do automatic bill paying, you will have to switch those systems over, and that’s a bit of a hassle. Banks know this, which is why they encourage customers to use them. If you have allowed any businesses to directly debit your account, contact those businesses and provide them with your new bank’s information. You’ll also want to ask your employer to reroute your paycheck if you use direct deposit. Your new bank will provide you with an authorization form. Then you can order your new checks and debit/ATM cards, which will typically arrive within 1-2 weeks. You should also consider ordering a new credit card and getting rid of your old one.
4. The Final Good-bye
Once direct deposits are going into your new account and you’ve made sure that there are no outstanding checks or automatic debits that need to clear, go ahead and close your old checking account. But make sure you follow your bank’s procedures for doing this or you could end up with fees for having an empty or inactive account.
I found that the whole process was actually pretty painless. Rep. Brad Miller (D-NC) has introduced a bill to ban nasty practices like exit fees to make ending your dysfunctional bank relationship even easier.
Having taken the plunge, I invite you to join me. The water feels good. And even better, no sharks.
Lynn Parramore is an AlterNet contributing editor. Follow Lynn on Twitter: twitter.com/LynnParramore
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