Credit unions vs banks: one year later for Bank Transfer Day
Former bank member leads effort to increase credit union members

By Marissa Lucero / CJ 475 Reporter
Posted Dec. 6, 2012

With Nov. 5 as its one-year anniversary, Bank Transfer Day has created more than a buzz, welcoming nearly 2.2 new credit union members. It's the largest increase for credit unions since the late '90s.

Hit-or-miss for Bank Transfer Day
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By Marissa Lucero

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Bank Transfer Day started after founder Kristen Christian, a fed-up Bank of America client, created a Facebook event-page inviting 500 of her friends on Facebook to abandon traditional banks to further explore options at not-for-profit credit unions no later than Saturday, Nov. 5, 2011.

The Facebook page soon attracted the attention of local media and, within weeks, Bank Transfer Day became more than a social phenomenon. "Everyone in the credit union industry has the most amazing core values: people-before-profit." Christian said.

Garrett Ray, a commercial banking officer at the First National Bank of Santa Fe, said there's no way to attribute the amount of bank transfers for one day. He described credit unions as having a very unique business model. Credit unions do not pay income tax because they are not-for-profit, therefore they are able to offer lower interests rates favoring consumers.

According to Ray, "Credit unions are looking to get into commercial lending, which means they would need a new credit department in that field. It would be interesting because if they succeed, that would have a tremendous impact on the whole banking industry."

And since credit unions don't pay income tax, they have the opportunity to offer loans with lower interest rates — thus potentially squeezing out community banks.

Hena Torres, part of New Mexico Educators Federal Credit Union's membership development department, said the credit union has no plans to change the way they have conducted business for the past 76 years.

President Barack Obama passed the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010, which regulated the way transactional banks did business and the way they made revenue. "They lost a considerable amount of revenue, and now they are coming up with ways to pay their stockholders." Torres said. "So, one of them is the $5 monthly fee for debit-card holders, because for banks it's all about their stockholders and the demand of money, more money and more money."

Ray said transactional banks didn't suffer from Bank Transfer Day, including the "Big Four," which includes Wells Fargo, Bank of America, Citigroup and JP Morgan Chase. "Unless they lost a big-time client, it is a drop in the bucket for them." Ray said. "Because, if you have something like $2,000 worth of deposits and no loans, to a large intuition like Wells Fargo that means nothing to them, absolutely nothing."

But, this isn't the last the people have seen from the woman who started it all a year ago. Kristen Christian is now working on a bill she hopes to introduce named the Federal Credit Union Act.