I’ve been Tweeting about this all morning, but I thought I’d make a slightly longer post.
Listen: If you’re in the US and you’d like to close your bank account at one of the big banks in protest in favor of opening an account at a smaller bank or credit union, follow the list of recommended steps here to do it right. Most importantly, open your new account and get it up and running before you close the old account. Because:
- Credit unions can be great, but they don’t work for everyone. Many have strict rules about who can be a member. Many have fee schedules and restrictions that are just as onerous as those of banks. You have to apply to be a member of a credit union – it can take a little time for them to accept you, and they may NOT accept you. Don’t risk financial limbo. Do your homework and get your account set up before you cancel your old one.
- When you open a new account, you might not have instant access to your deposits. When I moved to Chicago and opened a new bank account (with a small community bank, where I still bank today) it took something like 7-10 days for me to have access to my money. Ridiculous? Sure. But very real. Also, sometimes it takes a while to get your new debit card and/or checks in the mail and to transfer automatic payments and direct deposits over. Get all your ducks in a row at the new bank and then close the old account.
- Not everyone qualifies for a debit card! It’s something you “apply for” when you open a new bank account. I think this has broken the brains of some of my Twitter followers outside of the US. Even though it is YOUR money, a debit card is still an instrument of credit and you need to meet a certain threshold of creditworthiness to have one (and/or the ability to write checks). Even though merchants can instantly verify that the money is in your account and technology has shrunk the transaction time between presenting your card for payment and the actual debit taking place, when you pay with either a check or a credit card you are saying “I promise that the money will be in the account when you collect it.” For most of you it wouldn’t really be a problem, but if you’ve been living to paycheck to paycheck, and things have gotten sketchy for you financially, but you currently have a bank account with debit card and everything is in good standing, hold onto that while you set up your new account.
- You need to make sure all of your outstanding financial obligations are met before you close an account. Never, ever shut down an account that is overdrawn. It will profoundly negatively affect your ability to open a new bank account.
- Really audit your own banking needs, habits, and preferences. If you close your account at Big Evil Bank because they instituted a $5/month debit card holder fee, but you’re still using their ATMs twice a week because they have a machine near your house or your workplace and you don’t have time to locate your bank’s ATM, you are “sending a message” to the tune of of giving them an extra $24/month (Assuming $3/withdrawal – in addition to whatever your bank charges for using outside ATMs). Guess you really showed them!
Listen, it’s deliberately difficult and arcane to move your financial life from one institution to another – that’s how they get you. If you’re choosing to surmount that barrier and “vote with your feet,” do it! I just want you to take care of yourself in the process. It’s not a good “I’ll swing by after the protest and knock that out” decision.
CaptainAwkward.com 
Thanks for this – I in fact AM planning on changing my bank quite soon. (I have BoA now. Ugh.)
I have a personal loan with BofA where they kept adding and adding to the credit line (without being asked – they would just send me a letter that said “Good news! We’re raising your line to $x!”) and then abruptly one day cut it in half without notice or negotiation or even really a reason other than my overall debt:income ratio was bad, to which I say “Duh, grad school, which I was also in when you were raising my credit limit all the time.” New credit limit suddenly put my balance over the limit and incurred extra fees and a raised interest rate.
In other words, they are fuckers.
I was in a credit union before it was cool.
/hipster
I can’t disagree with anything you’ve said, but I did want to say to any readers who care that honestly, going with a local bank is great for many reasons and not just a cool protest move. I left BofA in college, when they pulled some fuckery I can’t even remember now, and went with a local bank. In the fifteen years since then I have gone with only local banks since, maybe five or six of them due to move, and they have all been great.
I’ve been with my local credit union for 9 good years now. There’re plenty of ATMs where I don’t pay any fees. My bank never screws me over. They don’t charge me for extras. Actually they don’t charge me for anything. There have been time that I overdrew one account and didn’t have overdraft protection. They just let me know that I needed to transfer over my money from another account and didn’t charge me, even though they could have. We have our mortgage through them, and when everyone was freaking out about mortgages being resold and random foreclosures, we never had to worry because, for a quarter of a point, they don’t resell your mortgage. Their rates were competitive, too. Once, due to a computing error, my online credit card payment went through late and I got dinged for it. The bank reimbursed me for the interest and penalty. I could go on, but you probably get the picture… I love local banks!
I like my local bank a lot, too. Money is really tight for me. I pay my bills, but it’s always a stretch, and sometimes at the end of the month there is a little unfortunate “Ok, this will all work if these bills come in in the right order” shenanigans. There is a person there who I have now worked with for eleven years who will call me on the phone to say “This bill came in today, and if we pay it you will be overdrawn by x amount. Can you make a deposit today to avoid fees?”
I’ve had friends witness me taking that phone call who are like, “What, what was that? Your bank tried to help you avoid fees? A real person called you on the phone and tried to help you?” It’s like I’ve just ridden a unicorn across the room.
Re: #3, a debit card is not necessarily an instrument of credit. Find out if your bank or credit union will let you opt out of “overdraft protection”. With OP, your debit card is really a credit card in disguise; without OP your debit card is just a debit card.
I have an ING savings account, and was going to get their checking account as well until I found out that they required overdraft protection. Applying for that checking account would have resulted in a “hard pull”, which is a user-initiated credit check that will damage your credit rating in the same way that applying for a loan will.
I left WaMu->Chase last year when the fees started getting ridiculous and I love love love my credit union!
Oh, man, all of this! Very important!
HusbandLogic and I spent a long time figuring out exactly how we would combine our finances before finally deciding we would have a big account where most of both our money went, and smaller personal accounts for our own benefit (because I firmly believe that everyone deserves their own reserves).
Which is how we ended up spread over three banks: Chase, a regional bank, and an internet bank. SO! If one of our banks gets too tetchy, we have escape routes. But the takeaway is definitely this: DO NOT close any accounts until you have an open and FULLY FUNCTIONAL account at your new bank. It can fuck all kinds of shit up for you personally, rather than fucking up the international conglomerate banks that you are trying to send a message to. Affix your own oxygen mask before fighting for justice, m’kay?
Another caution about credit unions: some of them don’t have the features that you are used to, so be sure to ask about EVERYTHING. For example, at mine, when I went in about changing in 2010:
EVERY checking account must have a corresponding savings account. Since I own and run 3 businesses, plus my personal account, plus have an account strictly for giving (so 5 checking accounts), that would be 10 total accounts!
EVERY account (checking, loan, savings, whatever) has a SEPARATE log in and pin online. Really? That would mean, again, 10 different ways into their online world. No easy transfer between accounts, no way to singly open all of my accounts.
Because of this, we never even got around to talking about online bill pay, but my guess is that they didn’t, or at least it wasn’t free.
This credit union, btw, is HUGE. Almost a hundred thousand members strong. Sure, it was free, sure it might have been safer, but the limitations they had in place were arcane. I ended up staying with Big Brother Bank. Might change in the future, but for now, the ease simply works better for me. I don’t have time to deal with the limitations.
I love my credit union so much that when I moved out of state I decided to hang on with them. The best benefit they have to make up for not having ATMs out of state is a service that lets me deposit checks electronicaly at home and then mail the checks to them. My account is credited immediately. On top of that they give cash back for ATM use fees, up to $20 a month, in case I really just need to withdraw some cash now and can’t wait until my next grocery store run for cash back. They’ve always called me if they saw that something bad might happen to my account balance. Some credit unions can be arcane with their forms and regulations, but mine is pretty awesome. And free! Do a little research and you can find a real gem.