Bank of America could end up being the best friend credit unions and community banks ever had.
Barraged by criticism from customers and the public, the bank on Tuesday canceled its plans to charge a $5 monthly debit card usage fee.
However, activists outraged when the bank announced the idea five weeks ago are pressing forward with this weekend’s Bank Transfer Day. They are urging consumers to close their accounts at big banks on or before Saturday and switch to a credit union instead.
Local credit unions said they’re ready.
“If banks are going to give us an opportunity to open new credit union memberships, we’re going to do what we can to take advantage of that,” said Greg Smith, president and CEO of the Pennsylvania State Employees Credit Union, or PSECU.
Site traffic at www.ibelong.org, the Pennsylvania Credit Union Association‘s website for consumers considering credit unions, increased fivefold after Bank of America announced the $5 fee, said PCUA Senior Vice President Mike Wishnow.
Credit unions are anecdotally reporting an uptick in membership applications, though firm data won’t be available for a week or two, Wishnow said.
Meanwhile, the midstate’s small banks are touting their free debit cards, free checking and community ties.
“We have held to free checking with no minimum balance for 26 years,” said Gary Nalbandian, chairman, president and CEO of Swatara Township-based Metro Bank. “This is really a time of great opportunity for Metro.”
A Los Angeles art gallery owner named Kristen Christian created Bank Transfer Day shortly after Bank of America unveiled the fee plan Sept. 29.
“I found it disgusting that a large and wealthy corporation would target the working class, especially after the bailout money,” Christian told LA Weekly last month.
Christian’s “Bank Transfer Day” Facebook page boasted more than 33,000 “likes” early this week.
Its logo is a Guy Fawkes mask superimposed over a stylized U.S. flag. Bank Transfer Day, Nov. 5, is Guy Fawkes Day in Great Britain, and the masks have become an informal symbol of opposition to government and corporate authority.
For Bank of America, the charge would have been a way of recouping revenue lost to new limitations on interchange fees, the fees banks charge merchants for processing transactions.
The Federal Reserve this summer set a limit of 21 cents — about half the old rates — on debit interchange fees for banks with more than $10 billion in assets.
Occupy Wall Street leaders have endorsed Bank Transfer Day, but Christian said she has no connection to the movement.
Local credit union officials said their business model, unlike banks’, aligns their interest with their members’ well-being.
Credit unions are owned by their members, so their shareholders and customers are the same people. Treating customers purely as profit centers “is not something that our board would ever tolerate,” nor would any credit union, PSECU head Smith said.
Belco Community Credit Union is embracing the event. It sent an email to members last week titled “Support Bank Transfer Day” and posted the same message on its website.
“It’s time to say ‘no more’ to the big banks. … If you have family or friends with a big bank, urge them to switch,” the message said.
Belco is hoping for new memberships, but isn’t expecting a huge surge, said David Forbes, vice president of marketing.
That’s because Bank of America and similar “too big to fail” institutions don’t have a large presence in the midstate, he said. That means relatively few people here face being hit by the new fees.
“Secondhand outrage doesn’t cause people to transfer,” he said.
PSECU will stay open on Bank Transfer Day — it is normally closed on Saturdays — and plans to compare account openings with the same period last year to measure results, Smith said.
Other large banks seem to have reconsidered fees in light of the backlash against Bank of America. Several, including PNC Financial Services Group Inc. and Citigroup Inc., said they wouldn’t charge debit card fees, the Wall Street Journal reported.
Wells Fargo on Oct. 28 said it was canceling a $3 monthly fee it was test-marketing in five Southern and Western states.
Local community banks aren’t keying in on Bank Transfer Day specifically, but are taking advantage of “the current environment” to market their advantages, said Nick DiFrancesco, president of the Pennsylvania Association of Community Bankers.
Metro Bank has a new billboard campaign promoting its free checking and free debit cards. Metro never relied on fees as an important revenue source, Nalbandian said.
“Therefore, we have a big advantage. … We don’t have to nickel and dime customers for every little thing,” he said.
Compared with credit unions, banks are geared to offer a broader, more sophisticated array of products and services as well as greater convenience in terms of branches and hours, Nalbandian said.
Mid Penn Bank has simplified and retooled its checking account product line, president and CEO Rory Retrievi said. The accounts have no monthly fees or nuisance fees, and the bank is planning a marketing campaign highlighting that fact, Retrievi said.
“Now’s the time to really go out and tell everyone: If you’re looking for a fair deal, we’re the fair deal,” he said.
Banking at a community bank ensures the money stays in the community, DiFrancesco said.
Generally there is little love lost between banks and credit unions — the latter’s tax-exempt status is a particular sore spot for banks — but credit unions recognize banks are integral to the financial system, Wishnow said.
Customers should shop around and “go with the financial institution that best meets their needs,” Wishnow said.
For many, that will be a credit union, he said.