Home > Personal Finance > As Bank Transfer Day Approaches, Credit Unions Winning Big

Comments 1 Comment

At least 650,000 people joined credit unions in the last month, and many more are likely to switch as Bank Transfer Day approaches, according to new studies released this week. That’s many times more than the 80,000 people who normally join credit unions every month, according to Lisa McCue, spokeswoman for the Credit Union National Association.

Many people who joined credit unions over the last few weeks did so to avoid rising bank fees, says Bill Cheney, president and CEO of the Credit Union National Association. Bank of America announced it would begin charging its customers $5 a month to make purchases with their debit cards; the fee attracted such widespread outrage that on Tuesday the bank announced it would drop the new fee.

[Related article: Want to Switch Banks? Here’s How to Do It.]

“The results indicate that consumers are clearly making a smarter choice by moving to credit unions where, on average, they will save about $70 a year in fewer or no fees, lower rates on loans and higher return on savings,” Cheney said of the association’s poll in a prepared statement.

The new accounts brought $4.5 billion in savings to the credit unions, according to the association’s estimates. More than 80 percent of credit unions reported increases in memberships over the last month, with the largest credit unions attracting the biggest share of new members.

And the switch to credit unions may not be over yet. A poll released Thursday by Harris Interactive finds that most bank customers actively dislike their own bank. And in terms of customer loyalty, big institutions like Bank of America and Wells Fargo fare the worst. Only 40 percent of Bank of America customers say they are extremely or very likely to continue banking with the company. JP Morgan Chase fares nearly as bad, with 46 percent saying they are likely to continue banking there.

[Related articles on Bank Transfer Day]

The numbers are abysmally low, even compared to other banks, 58 percent of whose customers said they were extremely or very likely to continue using their current institution.

The rate is far better at credit unions, where 87 percent of current customers say they are likely to keep their money at their present institution.

And forget loyalty; most big bank customers don’t even trust their own bank. Only a quarter of Bank of America’s customers agree that the bank is excellent or very good “at ensuring a trustworthy relationship” with them. Banks as a whole fared only marginally better, with 45 percent of current customers saying their institutions were trustworthy.

[Resource: Get your free Credit Report Card]

Three-quarters of credit union customers said they had trusting relationships with their financial institution.

While such abysmal numbers might seem that big banks could be in big trouble when it comes to retaining customers, the Harris Interactive report points out that not every unsatisfied bank customer will actually go to the trouble of switching to a credit union.

“Let’s face it, there are barriers to switching. It’s a time-consuming and complex task,” according to the Harris report. Still, the huge number of customers reporting dissatisfaction with their bank “may indicate a groundswell of support for customers to stop being so historically passive when it comes to switching their primary bank.”

[Featured Product: Monitor your Credit Reports and Scores]

Image: I-5 Design & Manufacture, via Flickr.com

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Certain credit cards and other financial products mentioned in this and other articles on Credit.com News & Advice may also be offered through Credit.com product pages, and Credit.com will be compensated if our users apply for and ultimately sign up for any of these cards or products. However, this relationship does not result in any preferential editorial treatment.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Our Owners

Credit.com is owned by Progrexion Holdings Inc. which is the owner and administrator of a number of business related to credit and credit repair, including CreditRepair.com, and eFolks. In addition, Progrexion also provides services to Lexington Law Firm as a third party provider. Despite being owned by Progrexion, it is not the role of the Credit.com editorial team to advocate the use of the company’s other services. In articles, reporters may mention credit repair as an option, for example, but we’ll also be sure to note the various alternatives to that service. Furthermore, you may see ads for credit repair services on Credit.com, but the editorial team isn’t responsible for the creation or implementation of those ads, anymore than reporters for the New York Times or Washington Post are responsible for the ads on their sites.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team