Bank Transfer Day

Last updated
$100 Bank Transfer Day poster Bank Transfer Day poster..jpg
$100 Bank Transfer Day poster

Bank Transfer Day was a consumer activism [1] initiative calling for a voluntary switch from commercial banks to not-for-profit credit unions by November 5, 2011. [2] [3] [4] As of October 15, 2011, a Facebook page devoted to the effort had drawn more than 54,900 "likes". [5] Debit card fees of $5 a month from the Bank of America are among steps leading to the Bank Transfer Day protest with a November 5 deadline. [6] Occupy Wall Street participants support the effort [7] even though the events are not related. [8] Among the detractors were Occupy Los Angeles participants: Sigurd Olin Christian, creator of the Bank Transfer Day event, stated that "he was accosted by Occupy Los Angeles organizers and has even received threatening phone calls" because of his pro-credit union rather than anti-bank approach. [9]

Contents

Christian, an art gallery owner in Los Angeles, California, said he was dissatisfied with Bank of America's "ridiculous fees and poor customer service." [10] He created an event on Facebook called “Bank Transfer Day” and invited his friends to close their accounts at big for-profit banks and move their money to credit unions by November 5, 2011. Christian chose November 5 because of its association with Guy Fawkes, who tried to blow up the British House of Lords and bring Catholic rule back to the United Kingdom, but was captured on that date in 1605. [11] [12] [13] This has been a continuing observance. [14]

Overview

Bank Transfer Day encourages bank customers to transfer their cash out of big banks to credit unions. The event is in response to what critics regard as excessive fees that big banks plan to roll out, notably Bank of America's decision to charge its debit card users with a $5 monthly fee and Wells Fargo's $3 charge of the same. The Facebook page for the event states the following: "Together we can ensure that these banking institutions will always remember the 5th of November!! If the 99% removes our funds from the major banking institutions to non-profit credit unions on or by this date, we will send a clear message to the 1% that conscious consumers won't support companies with unethical business practices." [15]

Similar sentiments predate the Bank Transfer Day by at least several years. In 2009, finance writer and radio host Dave Ramsey wrote: "I haven’t done business with big banks for years, primarily because of the awful customer service you get at most of them. I like local, community banks, and I believe whole-heartedly in credit unions. As a rule, these institutions practice excellent customer service. Plus, most of them didn’t get mixed up the sub-prime debacle." [16] Similarly, Suze Orman was quoted in 2009 characterizing large banks as often doing "anything to increase earnings and profits" for shareholders, while credit unions, accountable to their members, are more typically "ethical and honest". [17] In August 2011, Clark Howard advised his readers to be wary of "giant, monster megabanks" and to seek better interest rates and customer service at smaller banks or credit unions. [18]

Credit unions realize increased deposits

The Credit Union National Association (CUNA) said the association's web site aimed at informing customers about credit union services has seen traffic double. CUNA members reported an increase in account openings. According to Bill Cheney, CUNA's president and chief executive officer, the current surge in account openings has been more sustained than similar surges in the past. [19]

Between September 29, the day that Bank of America announced its (now defunct) monthly fee for debit card transactions, and November 2, credit unions received $4.5 billion in funds and 440,000 [9] [20] new customers, which equated to a 50% increase in new accounts. [21] [22] CUNA claimed that on November 5, 2011 alone, approximately 40,000 people joined credit unions, with credit unions realizing $80 million in new account funds. [23] [24] In a December newsletter, CUNA estimated that nearly 700,000 consumers had opened new accounts at credit unions between late September and the November 5 target date, [25] although an article published in American Banker in early December cites CUNA as offering a revised estimate of 214,000 new customers in October. [26]

Small banks and credit unions with assets valued at less than $10 billion can afford to offer extra rewards and avoid imposing additional fees, as they are exempt from the caps imposed by the Durbin Amendment. [27]

Background

The planned debit transaction fee increase is reportedly caused by the Durbin Amendment that went into effect on October 1, which is an addition to the Dodd–Frank Wall Street Reform and Consumer Protection Act, a U.S. federal statute [15] The Durbin Amendment limits the fees that banks can charge merchants when a consumer swipes their debit card from 44 cents to 24 cents. According to experts, a customer making 25 debit card transactions a month would lead the bank to lose $5 it would have made before the Durbin Amendment. As a result, it has been suggested(by whom?) that the larger banks, including Wells Fargo and SunTrust, are making up for lost revenue by charging for debit card use, the cost ranging anywhere from $3 to $5 per month, although no specific cause/effect relationship has been established. [28]

Democratic lawmakers asked the U.S. Justice Department to investigate the large banks that recently started charging debit card fees. A group of four congressmen claimed that major banks like Chase and Wells Fargo may have violated antitrust laws. In a letter to U.S. Attorney General Eric Holder, dated October 13, 2011, U.S. Representative Peter Welch and four other Democrats asked Holder to investigate whether big banks violated antitrust laws before announcing the fees. [29] [30] The four Congressmen said the timing of the new fees from each bank is suspicious. [31]

On October 12, 2011, U.S. Representatives Jason Chaffetz (R-UT) and Bill Owens (D-NY) introduced a bill that would repeal the Durbin Amendment. According to Chaffetz, repealing the Durbin Amendment would fix the disastrous consequences of this bill. [32] However, U.S. Representative Spencer Bachus (R-AL), who chairs the House Banking Committee, has suggested that revisiting the Durbin Amendment was a low priority. It is unclear whether the bill will ever see a vote. [33]

On November 1, 2011, Bank of America announced plans to cancel its $5 debit card fee in response to customer feedback. [34]

See also

Related Research Articles

<span class="mw-page-title-main">Debit card</span> Card used for financial transactions, usually without a credit line

A debit card, also known as a check card or bank card, is a payment card that can be used in place of cash to make purchases. The card usually consists of the bank's name, a card number, the cardholder's name, and an expiration date, on either the front or the back. Many new cards now have a chip on them, which allows people to use their card by touch (contactless), or by inserting the card and keying in a PIN as with swiping the magnetic stripe. Debit cards are similar to a credit card, but the money for the purchase must be in the cardholder's bank account at the time of the purchase and is immediately transferred directly from that account to the merchant's account to pay for the purchase.

<span class="mw-page-title-main">EFTPOS</span> Type of Electronic Funds Transfer system

Electronic Funds Transfer at Point Of Sale, abbreviated as EFTPOS; is the technical term referring to a type of payment transaction where electronic funds transfers (EFT) are processed at a point of sale (POS) system or payment terminal usually via payment methods such as payment cards. EFTPOS technology was developed during the 1980s.

<span class="mw-page-title-main">Transaction account</span> Bank holding that clients can access on demand

A transaction account, also called a checking account, chequing account, current account, demand deposit account, or share account at credit unions, is a deposit account or bank account held at a bank or other financial institution. It is available to the account owner "on demand" and is available for frequent and immediate access by the account owner or to others as the account owner may direct. Access may be in a variety of ways, such as cash withdrawals, use of debit cards, cheques and electronic transfer. In economic terms, the funds held in a transaction account are regarded as liquid funds. In accounting terms, they are considered as cash.

<span class="mw-page-title-main">Interac</span> Canadian interbank network

Interac is a Canadian interbank network that links financial institutions and other enterprises for the purpose of exchanging electronic financial transactions. Interac serves as the Canadian debit card system and the predominant funds transfer network via its e-Transfer service. There are over 59,000 automated teller machines that can be accessed through the Interac network in Canada, and over 450,000 merchant locations accepting Interac debit payments.

<span class="mw-page-title-main">President's Choice Financial</span> Subsidiary of the Loblaw Companies

President's Choice Financial, commonly shortened to PC Financial, is the financial service brand of the Canadian supermarket chain Loblaw Companies.

A direct debit or direct withdrawal is a financial transaction in which one organisation withdraws funds from a payer's bank account. Formally, the organisation that calls for the funds instructs their bank to collect an amount directly from another's bank account designated by the payer and pay those funds into a bank account designated by the payee. Before the payer's banker will allow the transaction to take place, the payer must have advised the bank that they have authorized the payee to directly draw the funds. It is also called pre-authorized debit (PAD) or pre-authorized payment (PAP). After the authorities are set up, the direct debit transactions are usually processed electronically.

<span class="mw-page-title-main">Overdraft</span> Payments from a bank account exceeding the balance

An overdraft occurs when something is withdrawn in excess of what is in a current account. For financial systems, this can be funds in a bank account. In these situations the account is said to be "overdrawn". In the economic system, if there is a prior agreement with the account provider for an overdraft, and the amount overdrawn is within the authorized overdraft limit, then interest is normally charged at the agreed rate. If the negative balance exceeds the agreed terms, then additional fees may be charged and higher interest rates may apply.

A merchant account is a type of bank account that allows businesses to accept payments in multiple ways, typically debit or credit cards. A merchant account is established under an agreement between an acceptor and a merchant acquiring bank for the settlement of payment card transactions. In some cases a payment processor, independent sales organization (ISO), or member service provider (MSP) is also a party to the merchant agreement. Whether a merchant enters into a merchant agreement directly with an acquiring bank or through an aggregator, the agreement contractually binds the merchant to obey the operating regulations established by the card associations. A high-risk merchant account is a business account or merchant account that allows the business to accept online payments though they are considered to be of high-risk nature by the banks and credit card processors. The industries that possess this account are adult industry, travel, Forex trading business, multilevel marketing business. "High-Risk" is the term that is used by the acquiring banks to signify industries or merchants that are involved with the higher financial risk.

<span class="mw-page-title-main">UnionPay</span> Chinese financial services company

UnionPay, also known as China UnionPay or by its abbreviation, CUP or UPI internationally, is a Chinese state-owned financial services corporation headquartered in Shanghai, China. It provides bank card services and a major card scheme in mainland China. Founded on 26 March 2002, China UnionPay is an association for China's banking card industry, operating under the approval of the People's Bank of China. It is also an electronic funds transfer at point of sale (EFTPOS) network, and the only interbank network in China that links all the automatic teller machine (ATMs) of all banks throughout the country. UnionPay cards can be used in 181 countries and regions around the world.

<span class="mw-page-title-main">Payment card</span> Card issued by a financial institution that can be used to make a payment

Payment cards are part of a payment system issued by financial institutions, such as a bank, to a customer that enables its owner to access the funds in the customer's designated bank accounts, or through a credit account and make payments by electronic transfer with a payment terminal and access automated teller machines (ATMs). Such cards are known by a variety of names, including bank cards, ATM cards, client cards, key cards or cash cards.

<span class="mw-page-title-main">Single Euro Payments Area</span> System for money transfers within the European Union area

The Single Euro Payments Area (SEPA) is a payment integration initiative of the European Union for simplification of bank transfers denominated in euros. As of 2020, there were 36 members in SEPA, consisting of the 27 member states of the European Union, the four member states of the European Free Trade Association, and the United Kingdom. Some microstates participate in the technical schemes: Andorra, Monaco, San Marino, and Vatican City.

ATM usage fees are the fees that many banks and interbank networks charge for the use of their automated teller machines (ATMs). In some cases, these fees are assessed solely for non-members of the bank; in other cases, they apply to all users. There is usually a higher fee for use of White-label ATMs rather than bank owned ATMs.

<span class="mw-page-title-main">Interchange fee</span> Fee paid between banks for card-based transactions

Interchange fee is a term used in the payment card industry to describe a fee paid between banks for the acceptance of card-based transactions. Usually for sales/services transactions it is a fee that a merchant's bank pays a customer's bank.

<span class="mw-page-title-main">National Association of Convenience Stores</span>

The National Association of Convenience Stores (NACS) is a trade association representing the convenience and fuel retailing industry. Founded in 1961, NACS has thousands of member companies, primarily in the United States but also in about 50 other countries. NACS conducts market research, hosts conferences and trade shows, and conducts political and legal advocacy. NACS is particularly concerned with the regulation of motor fuels, high credit card swipe fees, and labor law.

<span class="mw-page-title-main">Credit card</span> Card for financial transactions from a line of credit

A credit card is a payment card, usually issued by a bank, allowing its users to purchase goods or services or withdraw cash on credit. Using the card thus accrues debt that has to be repaid later. Credit cards are one of the most widely used forms of payment across the world.

A decoupled debit card is a debit card in the US that is not issued by and not tied to any particular retail financial institution, such as a bank or credit union. This is based on the ability in the US ACH Network payment system to make an electronic payment from any bank or credit union without needing to use a card issued by the bank or credit union. A third party, such as a retailer, can create a decoupled debit card which will use this system to make a payment from the customer's checking account. They may do this as part of a loyalty scheme or to reduce their own debit card processing costs.

<span class="mw-page-title-main">Bank</span> Financial institution which accepts deposits

A bank is a financial institution that accepts deposits from the public and creates a demand deposit while simultaneously making loans. Lending activities can be directly performed by the bank or indirectly through capital markets.

Nessa Feddis is an American attorney and banking industry spokesperson.

The Durbin amendment, implemented by Regulation II, is a provision of United States federal law, 15 U.S.C. § 1693o-2, that requires the Federal Reserve to limit fees charged to retailers for debit card processing. It was passed as part of the Dodd–Frank financial reform legislation in 2010, as a last-minute addition by Dick Durbin, a senator from Illinois, after whom the amendment is named.

<span class="mw-page-title-main">Simplii Financial</span> Banks of Canada

Simplii Financial is a Canadian direct bank and the digital banking division of the Canadian Imperial Bank of Commerce (CIBC). It offers no-fee chequing and savings accounts, a VISA credit card, Guaranteed Investment Certificates (GICs), mortgages and mutual funds. These savings and investment products are also eligible for registration under a Tax-Free Savings Account (TFSA) or a Registered Retirement Savings Plan (RRSP).

References

  1. ↑ Sigurd Olin Christian (November 1, 2011). "[Bank Transfer Day] fundamentally doesn't qualify as a boycott". Facebook . Retrieved November 1, 2011.
  2. ↑ Little, Lyneka (October 18, 2011). "'Bank Transfer Day' Gains Momentum on Facebook". Consumer Report (blog of ABC News). Retrieved October 20, 2011.
  3. ↑ Staff (October 13, 2011). "'Bank Transfer Day' Movement Goes Viral". WFXT . Retrieved October 20, 2011.[ permanent dead link ]
  4. ↑ Pfeifer, Stuart & Reckard, Scott (November 4, 2011). "One Facebook post becomes national movement to abandon big banks". Los Angeles Times . Retrieved November 6, 2011.
  5. ↑ (registration required)Schwartz, Nelson D. (October 15, 2011). "Online Banking Keeps Customers on Hook for Fees". The New York Times . Retrieved October 17, 2011.
  6. ↑ O'Connell, Brian (October 12, 2011). "Bank Transfer Day: A Protest with Your Money". MainStreet.com (via Yahoo! Finance). Retrieved October 19, 2011.
  7. ↑ Fed-up customers taking action against big banks, The Salt Lake Tribune
  8. ↑ 'Bank Transfer Day' Movement Goes Viral Archived October 15, 2011, at the Wayback Machine on WHBQ-TV, FOX News
  9. 1 2 Passman, Aaron (December 19, 2011). "How Kristen Christian Came To Launch Bank Transfer Day". Credit Union Journal: 23.
  10. ↑ Miller, Jen A. (October 15, 2011). "Fed Up L.A. Gallery Owner Launches 'Bank Transfer Day'". Savings Blog (blog of interest.com). Archived from the original on December 28, 2011. Retrieved October 20, 2011.
  11. ↑ White, Martha C. (October 10, 2011). "Wall Street Protests Get Specific: Could 'Bank Transfer Day' Pit Americans Against Their Big Banks?". Moneyland (blog of Time). Retrieved October 19, 2011.
  12. ↑ Digiovanni, Myriam (October 19, 2011). "Bank Transfer Day: A Good Time to Be a CU". Credit Union Times. Retrieved October 20, 2011.
  13. ↑ "'Bank Transfer Day' Causes CU Buzz."  –from Credit Union Times
  14. ↑ "Credit unions salivating ahead of Bank Transfer Day". Archived from the original on 2016-11-05. Retrieved 2016-11-05.
  15. 1 2 Thompson, Cadie (October 7, 2011). "Occupy Wall Street Backs a Nationwide Boycott Against Banks". NetNet with John Carney (blog of CNBC). Retrieved October 19, 2011.
  16. ↑ Ramsey, Dave (2009). "Banks Versus Credit Unions" TownHall.com, 22 April 2009
  17. ↑ Bissonette, Zak (2009). Suze Orman says: Switch to a Credit Union, Daily Finance.com, retrieved 25 September 2014
  18. ↑ "Spending-smart advice from author and consumer advocate Clark Howard - tribunedigital-chicagotribune". 2016-06-26. Archived from the original on 2016-06-26. Retrieved 2021-03-24.
  19. ↑ Palmer, Alex (October 15, 2011). "Credit Unions Boom – A Bank-Fee Revolt". New York Post . Retrieved October 19, 2011.
  20. ↑ The original estimate from CUNA was 650,000, but was later revised to 440,000.
  21. ↑ "Mass. credit unions count 20,000 bank transfers". Boston Herald . November 7, 2011.
  22. ↑ (November 7, 2011). "Credit Unions Feel Boost from Bank Transfer Day." Fox Business News. Accessed November 2011.
  23. ↑ Berman, Jillian (November 9, 2011)."Bank Transfer Day Pushes 40,000 To Join Credit Unions, Survey Finds." Huffington Post. Accessed November 2011.
  24. ↑ (November 9, 2011.) "CUNA survey: 40k members, $80M in savings on BTD." Archived 2011-11-11 at the Wayback Machine Credit Union National Association. Accessed November 2011.
  25. ↑ Credit Union National Association, Inc. (December 2011). "Bank Transfer Day Spurs Record Member Growth" (PDF). Credit Union Directors Newsletter, Vol. 35, Issue 12. Archived from the original (PDF) on 2013-09-25. Retrieved January 12, 2012.
  26. ↑ Stewart, Jackie (December 5, 2011). "Credit Unions Eat Crow On Customer Numbers". American Banker . Retrieved January 12, 2012.
  27. ↑ David Falchek (2 November 2011). "Small banks, credit unions capitalize on big bank fumbling". Citizen's Voice .
  28. ↑ Driscoll, Emily (October 11, 2011). "How To Avoid Bank Fees". Fox Business Network . Retrieved October 19, 2011.
  29. ↑ Coriell, Scott. "Welch to Holder: New Debit Card Fees Warrant Federal Anti-Trust Investigation". Archived from the original on October 18, 2011. Retrieved October 17, 2011.
  30. ↑ Welch, Peter (13 October 2011). "Letter Calling for Attorney General Investigation of Bank Fees" (PDF). United States House of Representatives. Archived from the original (PDF) on 26 December 2011. Retrieved October 17, 2011.
  31. ↑ Staff (October 13, 2011). "Democrats Ask Justice Dept. To Probe Bank Fees". Reuters (via Fox Business Network). Retrieved October 19, 2011.
  32. ↑ Touryalai, Halah (October 13, 2011). "New Bill Aims To Kill Durbin's Debit Card Fees". Adviser Network (blog of Forbes). Retrieved October 19, 2011.
  33. ↑ Mandelbaum, Robb (October 17, 2011). "In Battling Merchants, Banks Still Hope To Overturn Durbin Rules". You're the Boss. The New York Times. Retrieved October 19, 2011.
  34. ↑ Choi, Candice (November 1, 2011). "Bank of America nixes $5 debit card fee". Associated Press (republished on The Indianapolis Star). Retrieved November 1, 2011.
This page is based on this Wikipedia article
Text is available under the CC BY-SA 4.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.